5 biggest money management myths

[Clarkfan2]

You have to have money to make money....It's just a rich mans game.

 

 

David Bach in his book "The Automatic Millionaire" illustrated how a $3.50 latte per day invested in a retirement account can become over 900k in 40 years. It all boils down to how early you start investing.

 

Example rate of return is 12% (not in the book)

 

$100.00 per month for 40 years is over 1.1 million dollars.

 

$300.00 per month for 30 years is over 1 million dollars.

 

$600.00 per month for 25 years is over 1.1 million dollars.

 

$1200.00 per month for 20 years is almost 1.2 million dollars.

 

So if I asked you knowing this would you rather invest 100.00 a month or 1200.00 a month to get your million, which would you rather do?

 

Cable, internet, cellphone.....there's your $100.00. It's all about priorities and how soon you start. (What no delivered pizza 4 times a month?--Boo,Hiss!)

 

Still don't have any money to invest??? What about that 4% raise you just got? add it and the next one and you will be investing 8% of your income. Most can retire wealthy by just saving 10% of their income. If you do it pretaxed and get a employer match...you are that much further ahead!

 

I'm not a rich man...but just investing from 1% to 10% in your Employee Stock Purchase Plan---offers discounted price to employees. In six months I made 27.5% gain.(Discounted price is at least 15%) Don't know of any savings accounts,Money Markets,CD's, etc doing that. If you repeatedly get double digit returns, it will be hard not to get wealthy. I like DIM odds.

 

It's not a rich man's game....9 of 10 millionaires in the USA are first generation self-made millionaires....no they didn't inherit it or make a movie in Hollywood. It's the local accountant, trailer park owner, auctioneer, etc who lives on less than they make and save their money.

 

You don't have to have a lot of money to make money....you just have to live on less than what you make and invest the proceeds.

 

Clark

[hegemony]

why assume a 12% return? much be a high risk investment

 

I agree people need to save & invest more.

Edited February 18, 2005 by hegemony

[stormblade]

I was surfing one of the other bulletin boards (somewhere on MSN I think) and one of the discussion threads was about how much people spend on "connectivity" such as Telephone, Cell Phone, Internet, etc.

 

I sat down and did an assessment of the family finances where those things were concerned and was quite disturbed.

 

Between the Telephone, Cell Phone, Internet, Subscriptions to things "On-Line" and other communications factors we were spending in excess of $7000/year. What an eye opener that was. Needless to say things have been pared back to a reasonable amount.

[Dwayne]

Between the Telephone, Cell Phone, Internet, Subscriptions to things "On-Line" and other communications factors we were spending in excess of $7000/year.  What an eye opener that was.  Needless to say things have been pared back to a reasonable amount.

<{POST_SNAPBACK}>

I'm just curious, can you elaborate a bit? I'm trying to figure out where $7K might go, here's what I can think of:

 

Newspaper - $15/month or so?

Cable TV - $60/month if you have premium

Broadband internet - $40/month

Phone (landline) - $25/month

cellphones, assuming 4 phones - $150/month (these should be used for long distance calls rather than the landline)

 

Works out to $290/month, or $3480/year

 

What did you have that cost you $7000/year?

[hegemony]

cell phones $912

cable/internet $1140

landline $220

 

$2272 for us...for stormblade must be the "online subscriptions" which I'll let other speculate on...

Edited February 21, 2005 by hegemony

[stormblade]

Between the Telephone, Cell Phone, Internet, Subscriptions to things "On-Line" and other communications factors we were spending in excess of $7000/year.  What an eye opener that was.  Needless to say things have been pared back to a reasonable amount.

<{POST_SNAPBACK}>

I'm just curious, can you elaborate a bit? I'm trying to figure out where $7K might go, here's what I can think of:

 

Newspaper - $15/month or so?

Cable TV - $60/month if you have premium

Broadband internet - $40/month

Phone (landline) - $25/month

cellphones, assuming 4 phones - $150/month (these should be used for long distance calls rather than the landline)

 

Works out to $290/month, or $3480/year

 

What did you have that cost you $7000/year?

<{POST_SNAPBACK}>

 

For one thing I live in Japan and the cost of living is much higher here.

 

Telephone: $50USD

Cell Phone (Me): $150USD

Cell Phone (Wife): $100USD

Internet (Fiber Optic): $100USD

Wireless Internet (Laptop): $40USD

Internet Subscriptions: $70USD (VoIP, Norton AV, Goto MyPC, Barrons)

 

Needless to say the wife now has a "pay as you go" cell phone (she only uses it to receive calls 90% of the time) which costs her about $30USD. Trimmed back the Internet cost for fiber to $40USD and cancelled the wireless subscription for a $40USD savings. Got rid of the Goto MyPC and since I just switched everyone over to Macintosh - bye bye Norton AV.

 

As you can see the communications budget is leaner and meaner.

[hegemony]

For one thing I live in Japan and the cost of living is much higher here.

 

<{POST_SNAPBACK}>

Joukyou wa yoku wakarimasu!

[54regcab]

Myth #1: VA and FHA loans are a good deal for 1st time home buyers.

Fact: The fact is these are some of the most expensive loans on the planet, especially for people who have good credit.

 

Myth #2: No money down loans are a great way to get into a house.

Fact: By simply saving up 5% down you will get much better terms on the loan offsetting the costs of renting while you save the 5%.

 

Myth #3: 0% car loans are a good deal.

Fact: The fiance charge is built into the price of the car and you loose this much of the cars value IN ADDITION to the normal depreciation when you drive it off the lot. In most cases the "rebate" you give up is the true finance charge, all paid up front.

Example: A car lists for $25K on the lot with 0% down or a $5k rebate. The car is only WORTH $20K to begin with, they just added $5k to the price and offered to give you the $5k back or let you have "free" financing.

 

Myth #4: Buying a new car to lower your payment is a good idea even if it increases total balance owed.

Fact: You can never get ahead long term by continuing to borrow money for depreciating assets.

 

Myth #5: As long as my payments are current I can afford everything I own.

Fact: Debt should NEVER be used to buy consumable goods (including vehicles), if you have to borrow money to pay for it, you can't afford it. The exception to this is real estate since you have to live somewhere and real estate generally goes up in value.