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February 19, 2018Written By Paula Pant

8 Money Myths That Might Be Holding You Back

Learn the truth behind 8 common money myths that might be wrecking havoc on your finances.

I live in a two-bedroom condo. It’s furnished with a used couch and used coffee table.

My shoe rack is made from old cardboard boxes glued together.

Almost everything else in my home is from Craigslist, Amazon and Overstock. I consider IKEA to be a splurge.

My favorite hobbies are hiking and camping (free and cheap).

My friend Amanda cuts my hair. (In fairness, she’s a hairstylist.)

I can’t remember the last time I got a manicure or pedicure.

When I travel overseas, I fly with airline miles and visit countries where the exchange rate works in my favor.

The cheapest car I’ve ever purchased cost $400. I drove it for a year and a half, then sold it for $200.

The newest car I’ve ever purchased was 4 years old.

I bought my laptop and phone used (refurbished).

I lived with roommates until I was 31.

And I never need to work a job I dislike again.

This is what financial independence looks like.


(I originally published this on Instagram, where you can find me microblogging daily.)


One of the pitfalls of society (gee, that’s an uplifting intro) is our massive lack of financial education.

We’re taught the Pythagorean theorem, but not how to balance a checkbook. Or what “APR” means. Or the difference between marginal vs. effective tax rates.

Most people don’t understand how money works.

Instead, we’re socialized with myths and misconceptions about money:

  1. Buying is always better than renting;
  2. Buying a new car with a zero interest rate is smart;
  3. The stock market is risky so stay in cash;
  4. Bitcoin is an ‘investment’;
  5. Don’t worry about retirement if you’re young;
  6. Repay your student loans before you start a retirement fund;
  7. Holding debt will improve your credit score;
  8. You can’t invest unless you’re an expert;
  9. Your home is an ‘investment.’

To name a few.

One of my goals with this website is to demonstrate how to make math-driven, spreadsheet-based decisions about money. Many of these misconceptions collapse under the weight of careful scrutiny.

Each one merits its own article, but that’s another topic for another today. Today, I’d like to chat about broader myths and misconceptions — the kind that affect our mindset.

Here are eight financial myths, in no particular order: (These come from Podcast Episode #87.)

Myth #1:

Money is scarce.

We’re taught that money is scarce, so you must clutch it with tight fists. Money is hard to earn and easy to squander.

But is this true? Or is this a self-fulfilling prophecy? If we believe that money is scarce, do we close ourselves off from receiving it?

When I say “self-fulfilling prophecy,” I don’t mean to sound all “woo-woo, law of attraction, crystals and unicorns.” If you want to attract money into your life, you need more than mere positive thinking. You need to double down. Write a plan. Start a side business. Launch a website. Pitch people. Buy an investment property. That’s how you attract money: You hustle.

But you’re not likely to take that type of radical action if, deep down, you believe money is in short supply.

Scarcity is a de-motivator.

If we internalize the idea that money is scarce, then it becomes rational to obsess over saving rather than earning. If money, like time, is a fixed quantity, then optimization comes from cutting rather than growing.

And that’s a recipe for shortchanging yourself.

Now, to be clear, I’m a natural-born saver and I encourage a minimalist(-ish) lifestyle, given that many people seem to have confused “needs” with “wants.”

But extreme saving is a problem. Clipping coupons, stockpiling toilet paper, and hoarding a garage brimming with useless plastic junk because it was “such a good deal” at a yard sale — that’s not frugality. That’s a variant of excess.

You cheat yourself when you overlook dollars to pick up dimes. You fall short of your potential when penny-pinching becomes more important than creative production.

Frugality is tempting: there’s an immediate payoff, instant gratification. There’s no fear of failure. And it focuses on consumerism (buying for less), which is more comfortable and familiar than creation (converting an idea into reality).

But it must be held in moderation. Those “53 ways to save money!” listicles reflect a deep-seated belief that shopping the post-holiday clearance aisle for discounted wrapping paper is a better use of your time than literally anything else you could be doing.

Myth #2:

You’ve heard the expression: “It’s not what you earn, it’s what you spend.”

Meh.

This is half-true. What you spend matters, but what you earn also matters. It’s both. It’s what you earn and what you spend.

Your job is to increase the gap between earning and spending. There are two ways to grow this gap: earn more, spend less, or a combination of both.

Grow the gap in-between your income and your expenses. All of money-management boils down to this simple idea: grow the gap.

Imagine that you earn $60,000 per year. You land a promotion, which increases your salary to $70,000. You start a side hustle, which might bring in $15,000 per year. You invest in a rental duplex, which nets $8,000 per year.

You’re now earning an extra $33,000 per year — more than half your former salary, and far more than you could have saved through belt-tightening alone.

What you earn matters.

Of course, if you blow this extra $33,000 on fancy cars and cocktails, then DUH, you’ll reap what you sow. But if you invest this money, you’ll launch yourself on a faster trajectory than the people who focus on spending alone.

Myth #3:

Money doesn’t matter.

Uhh, money does matter. If it didn’t, why wake up to an alarm clock? Why climb out of a cozy warm bed, scrape ice off your windshield, and sit in bumper-to-bumper traffic? Why spend the day drinking lukewarm coffee under fluorescent lighting, while you answer emails and shuffle paper and deal with a passive-aggressive supervisor?

Why would you endure this with your short, beautiful life … and then turn around and claim that money doesn’t matter?!

This makes zero sense.

When people say that money doesn’t matter, oftentimes they mean buying unnecessary crap doesn’t matter. Lamborghinis don’t matter. Gucci handbags don’t matter. That’s true. That’s also irrelevant.

Money is distinct from the physical goods it purchases.

A surplus of money buys the opportunity to engage in work that fuels you. Money allows you to wake up to an alarm because you’re going to spend the day creating art, or writing, or volunteering, or building a business, or taking care of your children.

Time is scarce, and value derives from scarcity. Time, therefore, is more valuable than money.

Until you reach financial independence, you’ll trade time for money. This means you’re exchanging something rare and non-replicable for something of lesser value. That’s a losing trade.

Money is the tool that allows you to stop making this lopsided trade.

Myth #4:

Money is the root of all evil.

The actual quote is “for the love of money is the root of all evil.”

Money itself isn’t the root of all evil. Loving money — i.e., greed — can lead to evil decisions, but money itself is an inanimate object. It’s neither good nor evil.

Money is a tool, like a hammer. You can use a hammer to build a house or torture a kitten. Regardless of how you use it, the hammer itself is merely an object. The person wielding the hammer imbues it with meaning.

Money amplifies you. If you were already a jerk, and then you get a bunch of money, now you’re just a jerk with money.

But if you’re a kind, responsible person, your money management will reflect that.

We should neither blame nor praise money. Money is nothing more than a tool. It is our job to learn how to use that tool in the best way that we can.

Myth #5:

Money causes conflict. Mo’ money, mo’ problems.

As a child, if you saw your parents or siblings arguing about money, you may have developed the unconscious idea that money creates conflict.

In reality, your spending is a reflection of your priorities. An argument about money, fundamentally, is an argument about values.

Often, a person’s stated values — the values they think they hold — aren’t reflected in the way they spend.

Someone might say, “my health is important,” but regularly choose fast-food to save a few bucks.

Someone might say, “I want to travel, but I can’t afford it,” but they order from restaurants twice a week.

Someone might say, “I’m committed to growing my side business,” but they’re not willing to invest in it.

Money reflects what people actually care about. When people argue about money (including internal conflicts with themselves), they’re not actually arguing about money. They’re conflicted about priorities.

Myth #6:

It’s shameful or embarrassing to think about money.

Last year, I struck up a conversation with a random stranger on the sidewalk. He asked what I did for a living. I replied, “I’m a blogger and a podcaster.” He asked what topics I covered. “Money,” I replied.

And he said: “Oh, it’s a shame we have to think about money so much.”

Really? Why?

What’s wrong with thinking about money? People may argue that it’s more noble, more morally authoritative, to discuss ‘safe,’ ‘esteemed’ topics like social causes and art and music.

But — um, hello! — money allows you to spend your time focused on your passions and priorities. What could possibly be more critical than that?

Myth #7:

Rich people suck.

Oftentimes, people who would agree with the statement “you shouldn’t judge someone based on their socioeconomic class” will also, in the same breath, make flippant comments like “rich people don’t care,” “rich people are greedy,” or “rich people suck.”

I think some people hold a deeply limiting belief that they’ll never be rich. Nor will their friends or family. A reasonable coping mechanism, therefore, is to “otherize” the wealthy.

But as we’ve learned, the “us vs. them” mindset is never positive for society. This is a mindset we should eradicate, not encourage. If you agree that it’s wrong to judge others based on their socioeconomic class, remember that this works in every direction.

Myth #8:

Profits are made by taking advantage of others.

This myth comes from the idea that life is a zero-sum game. When one person wins, another loses. Any money you’ve earned is “made off the back” of someone else. Profits are evil; if you own a business and make profits, you are necessarily taking advantage of others.

Every time I publish a real estate income report, I get comments telling me that I shouldn’t profit from my tenants. They tell me that I should “be nice” and offer my properties at-cost; otherwise I’m taking advantage of my tenants.

I’ve thought about this carefully, and here is my conclusion:

If rental investors couldn’t make money, there would be no incentive to invest.

At a minimum, a rental property needs to earn the-same-or-slightly-better than an index fund in order to incentivize the investment. Otherwise, the rational decision is to stick with index funds.

If collecting returns from a rental property is ethically wrong, what’s the alternative? Should we eradicate renting as an institution? Should we live in a society in which nobody is a landlord — and therefore it’s impossible to move unless you have the funds to buy?

How would you move to a new city, if you couldn’t rent? Would we stay in hotels and Airbnbs? Or are these also taking advantage of people who need short-term housing?

You see the problem with this line of reasoning.

Here’s the reality:

My tenants need short-term housing in increments of one to two years. I build a team that purchases, renovates, repairs, maintains, and manages this housing.

The tenants get what they need – an enjoyable place to live – and I receive ongoing compensation for building and managing this business. That’s a win-win.

Mutual wins aren’t just a real estate issue.

My friend Amanda is a restaurant hostess who runs a side business as a licensed hairstylist. She cuts my hair, and I pay her. This is another win-win. She profits, and I get a haircut.

Should Amanda stop profiting off people who need haircuts?

Last week, I hired a graphic design company in Scotland to redesign the logo for this website. Are they unjustly profiting off people who need logo design?

Yesterday, I bought food from a grocery store. Did this store unjustly profit off people who want dinner?

Many people equate “profits” with greed. And that’s based on the premise that transactions are win-lose, rather than win-win. This is a limited view of the world.

Businesses are sustainable when both parties are happy. Profits that come from win-wins are encouraged.


The Bottom Line:

We hold many misconceptions around money. Some of these are tactical, such as misinformation about credit scores. Others are mindset-oriented, and influence how we feel about concepts like profits, scarcity/abundance, and the level of attention that we give to our finances.

Are you hanging onto any money myths that are holding you back? Share in the comments!

Learn the truth behind 8 common money myths that might be wrecking havoc on your finances.
Most people don’t understand how money works.

Instead, we’re socialized with myths and misconceptions about money.

Unfortunately, most of these myths negatively impact our mindset around money, and unconsciously hold us back in many ways. 

I dispel these myths here, as well as provide alternate solutions that provide a better outlook on money.
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Posted in: MythsTagged in: myths about money, personal finance, real estate investing

57 Comments
Leave a Comment
  1. Timothy Hoyle

    # February 19, 2018 at 5:15 pm

    “….and hoarding a garage brimming with useless plastic junk because it was “such a good deal” at a yard sale — that’s not frugality. That’s a variant of excess.”

    Bam. Awesome point. I love it.

    “When people say that money doesn’t matter, oftentimes they mean buying unnecessary crap doesn’t matter. Lamborghinis don’t matter. Gucci handbags don’t matter. That’s true. That’s also irrelevant.”

    Ahahaha! I had to laugh at this one. A point that is also true and refreshing due to its rarity.

    “…Until you reach financial independence, you’ll trade time for money. This means you’re exchanging something rare and non-replicable for something of lesser value. That’s a losing trade.”

    My last grandfather died in 2017. I wish we could all remember your above point.

    “Oftentimes, people who would agree with the statement “you shouldn’t judge someone based on their socioeconomic class” will also, in the same breath, make flippant comments like “rich people don’t care,” “rich people are greedy,” or “rich people suck.””

    LOL! Oh geez, you are killing it!

    Reply ↓
    • Paula Pant

      # February 21, 2018 at 12:09 pm

      Thank you!! I enjoyed writing the “variant of excess” sentence a lot — that was one of my favorites from this article.

      Sorry to hear about your grandfather.

      Reply ↓
  2. Geoff N.

    # February 19, 2018 at 5:36 pm

    Great points Paula. I’m actually very surprised that you get people saying you shouldn’t make a profit of your rentals. Why would they be reading your articles in the first place with that mindset? I think perhaps it all ties into your statement early in the article regarding the massive lack of financial education. I’m 43 and I never received one ounce of financial education in high school OR college, not to mention my parents! I told my mom the other day that I invested in a large apartment complex syndication and she said, “what did you do that for?” She also regularly says I should sell my rentals. I love my mom but this advice is coming from someone who is on fixed income who always worries about money and a very “you should never talk about money” attitude. I think a lot of this thinking is generational, but that is changing rapidly. Everything I know is from my own reading and self education. We are lucky to have the internet with endless information. Another good post, please write more often!!!

    Reply ↓
  3. Briana Hurd

    # February 19, 2018 at 6:09 pm

    I loved the list of things you havent splurged on – these reminders help keep me focused and help resist impulsive purchases and keeping up with the Jones’s. Thank you too for the myths – these are helpful discussions as I try to transform my husband and kids’ ways of thinking.

    Reply ↓
    • Paula Pant

      # February 21, 2018 at 12:11 pm

      Money, by purchasing time, can bring greater meaning to our lives — and that’s much more important than keeping up with the Joneses. I’m glad you see that. Good luck with getting your family on-board. Share this article with them (or a podcast, if that’s more their speed) if that helps! 🙂

      Reply ↓
  4. Km

    # February 19, 2018 at 6:11 pm

    Great article! Re-solidiffy on some of my choices to continue renting and investing the savings into the stock market and index funds. I live in Vancouver and it’s just ridiculously expensive to buy right now and I have a hard time convincing friends to not do that but instead I am looked down upon renting instead of buying.

    Reply ↓
    • Robin

      # February 28, 2018 at 12:23 pm

      My husband and I are in the same boat! We rent a small house, so there are zero repair bills, and our utilities are low. People keep pressuring us to buy… while, in the next breath, complaining about their massive plumbing/roof/hot water heater (fill in the blank) bill they just received! It’s worth it to be “looked down upon” when you’re paying so little on a place to live.

      Reply ↓
  5. vladimir manjko

    # February 19, 2018 at 6:16 pm

    Great collection of advice, keep on writing!

    Reply ↓
  6. Emenike Emmanuel

    # February 19, 2018 at 6:26 pm

    This is an interesting piece, Paula.

    I have met a lot of people with these misconceptions about me. Why people believe that for them to earn more, someone has to lose is what I don’t quite understand.

    I desire that everyone will see your perspective to these money myths

    Thanks for sharing.

    Emenike

    Reply ↓
  7. Accidental FIRE

    # February 19, 2018 at 7:02 pm

    Awesome post Paula. Numbers 6 & 7 stand out to me. In my family, talking about money is forbidden. I think that’s mostly because my parents are depression-era and it’s just taboo to them. I hated that growing up and some of it rubbed off on me, although I’m ditching it.

    And #7, don’t get me started. The media and many others have made quite an industry out of demonizing the rich. The term “big corporation” has a negative connotation in today’s world, as does “rich guy”. This topic goes way too close to politics so I won’t elaborate, but it really angers me. I’ll just say this, the numbers clearly show that the vast majority of rich people earned their wealth, they didn’t cash out a trust fund.

    Enjoyed the post!

    Reply ↓
  8. Mary H

    # February 19, 2018 at 7:07 pm

    So much of what I know about money is firmly rooted in emotions. That’s why I love what you said: “One of my goals with this website is to demonstrate how to make math-driven, spreadsheet-based decisions about money.”

    When decisions are based on facts, it takes the drama out of saving and spending. It become just another necessary item in a well constructed life. Much easier to decide how to handle it.

    I’m impressed by your whole orientation toward money. And delighted you offer really helpful info for people like me who are slowly re-orienting ourselves to a more fact-based relationship with the stuff.

    Reply ↓
    • Paula Pant

      # February 21, 2018 at 12:12 pm

      Thank you so much! “Fact-based relationship with money” — YES. 100 percent YES. 🙂

      Reply ↓
  9. Lisa

    # February 19, 2018 at 7:28 pm

    Really enjoyed reading this. Thanks! Good points.

    Reply ↓
  10. Dianna Carlton

    # February 19, 2018 at 9:16 pm

    Hi there Paula, thanks for your excellent points. This article caught my attention because I struggle with what could be considered a “poverty consciousness”. You mentioned the law of attraction. I know that according to that theory, if I worry about poverty, that is what I am going to attract into my life. I’ve actually done a fair amount of studying on the subject. Yet, I still fall back into a negative mind-set. Do you have any insight you could offer, or even other material I could look at, to help flip that mental switch?

    Reply ↓
  11. Maven Lin

    # February 19, 2018 at 9:41 pm

    I am greatly affected why people comment that way on your rental income. I’m not sure from what planet are they coming from? Grrr. #somuchhate They should even be thankful you’re sharing them this sensitive information and giving them an idea that they could use as well towards their financial freedom.

    Anyway, continue to be kind, authentic, and awesome, Paula! <3 Love love.

    Reply ↓
    • Paula Pant

      # February 26, 2018 at 9:54 pm

      Thank you Maven. <3 Love always!

      Reply ↓
  12. Jenny Chien

    # February 19, 2018 at 11:42 pm

    Spot on article! As they say, “It’s all in the mind.” For the same reason why I couldn’t agree more on your point to consider that “home is an investment.” Yes, it’s a major financial decision that can give you peace of mind, but certainly, it’s not an investment just because it appreciates because a true investment requires more than the prospect of an increase in value.

    Reply ↓
  13. Hustle Hawk

    # February 20, 2018 at 12:34 am

    This post didn’t go in the direction that I was expecting – when I read the part about spreadsheets and math my heart sank!

    I’m glad that you decided to look at the emotional side of money and our relationship to it. Humans are by very nature emotional creatures, if you understand the emotions driving decision making you can react to those emotions in the most appropriate way.

    Reply ↓
    • Paula Pant

      # February 21, 2018 at 12:15 pm

      Absolutely! Being aware of our emotions and mindset around money is KEY to not being beholden to those forces.

      We need to tell ourselves, “Hey, this decision isn’t rational. This is my mind trying to justify taking an action that’s rooted in a feeling.”

      Then we might make a different decision.

      Reply ↓
  14. Ms ZiYou

    # February 20, 2018 at 3:35 am

    Hi Paula, yes I agree these are some myths that really need busting…or at least getting the general population to realise there are many different ways to look at money.

    In the UK I’m about worried about the advance of the hard left, and how it is influencing people to think generating money by hard work and novel ideas is bad!

    Reply ↓
  15. Mommy Jhy | www.myfavoritelists.com

    # February 20, 2018 at 5:40 am

    Hahaha someone actually told me that I should work as an accountant because I talk about saving and investing money. Duh!

    Reply ↓
  16. Elllie

    # February 20, 2018 at 8:17 am

    This is such a thought-provoking post for me. I’ve been very well brought up with frugality and to a certain extent it’s served us very well. I have no student debt for example (although that’s fairly easy if you’re above a certain age and come from the UK) and I paid my first mortgage off at 34. However, I’m starting to realise that, despite its benefits, frugality is really holding me back and I can’t be the best version of myself while I am constantly counting pennies. I say no to too many things because it doesn’t fit my frugal mindset, and also to be blunt, I don’t have the income because I’ve never prioritised earning over saving.

    This is quite a scary and exciting time for me as I totally change my focus from frugality to earning and blogs like this really help along the way. Thanks, Paula!

    Reply ↓
  17. Frieda

    # February 20, 2018 at 8:46 am

    I’ve never thought about it this way, but this article really brought home how extreme saving is a weird form of consumerism. I’ve dabbled in couponing at the drugstore and used to haunt thrift stores and yard sales desperate to find any “good deals” to buy. The feeling was really no different than shopping at the mall, just at a lower price point. Thanks for the insightful and incisive post!

    Reply ↓
    • Paula Pant

      # February 21, 2018 at 12:26 pm

      “extreme saving is a weird form of consumerism” — exactly!!!!

      Reply ↓
  18. Ameen

    # February 20, 2018 at 12:45 pm

    Thank you for all your amazing content, just stumbled upon your site today and I am truly inspired and grateful. Keep it going Paula!

    Reply ↓
  19. Aaron

    # February 20, 2018 at 1:50 pm

    Paula, great article! I’m certainly guilty of believing in some of these myths.

    I did want to discuss the profit myth a bit more. I think you’re already getting at this when you say, “profits that come from win-wins are encouraged”, but I think most people’s problems with profits come from perceived win-lose situations. For example, Walmart taking advantage of the labor market and poverty programs (they underpay their employees in a small town and they know employees have limited job prospects elsewhere, they know that employees can and will use government programs like food stamps if they’re not paid a living wage, they schedule employees for 25 hours a week even though they would prefer to be full time so the company doesn’t have to give them benefits, etc.) all while achieving tremendous annual profits.

    I very much agree with the notion that far too many people view the economy as win-lose (you only have to look at the Oval Office right now to find a good example) when there’s a TON of win-win out there. But I think we should still be able to identify and call out win-lose situations when we see them.

    Reply ↓
    • Paula Pant

      # February 21, 2018 at 12:23 pm

      Oh, DEFINITELY call out the win-lose situations. The people who are on the “lose” side of the transaction need advocates.

      But don’t assume that ALL business, ALL profits, are win-lose transactions.

      The word “profit” has taken on a dirty connotation. We need to eradicate that myth from the social fabric. People cannot become entrepreneurs and contributors to society if they believe that making profits = wrong.

      Too many freelancers, writers, musicians, artists, videographers, photographers and other solopreneurs will underprice themselves, or give their talents away at a fraction of the cost, because they think profitting is wrong, or that it somehow makes their efforts “less pure.”

      I get emails all the time from people who say, “how dare you claim to want to help people, when you’re making money from your blog and podcast!” — as if one negated the other.

      And women in particular are taught not to negotiate, ask for more money, or value our time. And I think this largely stems from the idea that “profits” are not nice.

      Eradicating the negative connotation around the word “profits,” and promoting the practice of win-win transactions, is crucial to a healthy workforce.

      Reply ↓
  20. Mrs. RME

    # February 21, 2018 at 3:20 pm

    Great post! I absolutely LOVE how you contrast a minimalist(-ish)/frugal lifestyle with extreme saving which often leads to junky excess! Less is often more and is a lifestyle choice that can lead to FIRE!

    Reply ↓
  21. Ramona @ Personal Finance Today

    # February 22, 2018 at 7:37 am

    We dislike the idea of renting, because over time you just paid for something and get nothing from it (except for, of course, using the apartment/house). In my country a lot of our parents got into mortgages so that, when they died, we’d get something ‘ours’. It was a great move, especially now, when wages are still not as big as they should be and real estate is almost as expensive as in the countries with way bigger salaries.

    I and husband both inherit an apartment and now we’re working on renovating a house in a rural area, that we’ll probably use when old. If we do immigrate, we’ll keep all real estate in our country and probably rent abroad. I dislike the idea, but I don’t think we’d be able to afford a house too soon, so renting it is.

    Fortunately my daughter will also have something ‘hers’, since she can sell the apartments/home, if she wants and maybe pay for college. Or create a small business, whatever she likes.

    So, I’m one of those who cringe when it comes to the idea of renting and I’ll clearly hate every month of it, if we do get to move 😀

    Reply ↓
  22. DocB

    # February 23, 2018 at 9:00 am

    Very thoughtful comments. Really gets at the concept of frugality that soooo many other sites push as virtuous without thought.

    Reply ↓
  23. Tom

    # February 23, 2018 at 9:58 am

    Hi, Paula – I’m interested to learn why you think that “buying a new car with a zero interest rate is smart” is a myth? Here’s my understanding:
    -Money becomes less valuable over time. That is, pending $20k immediately on a new car is worth more than $20k over 5 years. If the bank or dealership is giving you free money, why not take it?
    -If you pick a new, highly reliable car, then theoretically, you shouldn’t have maintenance issues for the first few years (and if you do, it will be covered by a warranty)
    -Of course, the above assumes that you’ll buy a reliable car and drive it into the ground after 200k miles. If you change cars every few years, then you don’t get the advantages of buying.

    This topic is particularly relevant to me, as my wife’s and my cars are end of life, and one is having significant maintenance issues, so we’re looking into fix vs. replace scenarios. Thanks for any feedback you could give.

    Appreciate your unique voice on money. Have an outstanding day!

    Reply ↓
    • Paula Pant

      # February 26, 2018 at 10:21 pm

      Hi Tom!
      Great question. Let’s compare two options:

      Option 1: 2018 Honda Civic LX Sedan, with zero miles. Price: $18,840.
      Option 2: 2013 Honda Civic LX Sedan, with 25,000 miles. Price: $13,400.

      Difference: $5,440.

      Next, let’s look at financing. We’ll assume you need to finance both vehicles (i.e. you don’t have cash).

      Option #1: If you buy the brand-new car, the dealership will give you 0% financing for 60 months.
      Option #2: If you buy the used car, you’ll get charged 4.21% financing for 60 months.

      If you borrow $13,400 at 4.21% for 5 years, you’ll pay $1,483.02 in interest.

      The question becomes: Would you pay an extra $5,440 (depreciation in the first five years) to avoid paying $1,483 (interest)?

      Buying the used car will put you $3,957 ahead.

      Let’s assume the 5-year-old vehicle requires $1,000 in additional maintenance, above-and-beyond what the new car would require.

      You’re still $2,957 ahead.

      There’s one more variable that’s harder to calculate. If you keep each car for 10 years // until you’ve put 200,000 miles on the engine, then yes, when you sell the car, the older car will have a slightly lower resale value.

      But the resale value difference between a 10-year-old car vs. a 15-year-old car will be much narrower than the spread during the first five years of the car’s life, and its resale value will be heavily dependent on how well the car has been maintained throughout its life.

      Hope that helps!! 🙂

      – Paula

      (According to ValuePenguin, the national average auto loan financing rate in 2017 for 60 months loans was 4.21 percent, which is how I choose that number.)

      https://www.valuepenguin.com/auto-loans/average-auto-loan-interest-rates

      Reply ↓
  24. Brian

    # February 23, 2018 at 7:14 pm

    Great article. We believe in many of these myths because we were told that when we were younger and the world keeps telling it us as we grow up. Luckily I could get away from these myths 🙂

    Reply ↓
  25. Revanche @ A Gai Shan Life

    # February 26, 2018 at 4:04 pm

    I have always believed in the debunked #2 (that it’s about your earnings AND your spending/saving choices) but this year, I’m tackling #1 because as much as I think I’ve moved out of a scarcity mindset, it’s still there.

    I very much agree that #8 is preposterous. You can choose to believe that but I choose to believe that we can become successful by taking advantage of opportunities, as long as we take care of people. J. Money’s post today is a case in point! His landlord may have felt that they needed to make that extra money by going back on their work and booting a family but that was a jerk move. They could have worked with J’s family, they could have done their due diligence FIRST instead of making promises they didn’t keep, they could have chosen to break the news to J’s family with some offers to help them in some way to offset the need to break their promise. That they didn’t may not have a direct immediate effect but I sure do think that that mindset eventually blows back in some way. Or maybe I want to believe that karma’s going to bite his landlord 🙂

    Reply ↓
  26. Cal @ FI Me Outta Here

    # February 27, 2018 at 3:11 pm

    I’ve also heard that “The lack of money is the root of all evil”. If you think about it a bit, it’s definitely got some validity.

    How often do we compromise ourselves for money, because the lack of it would affect us and our family’s livelihood?

    Reply ↓
    • Paula Pant

      # March 6, 2018 at 5:24 pm

      That’s an excellent take on that saying. Desperation can push people into dark places …

      Reply ↓
  27. Millionaire Immigrant

    # March 1, 2018 at 5:58 am

    Paula, Great job busting these myths about money. What do you have to say about people that say money is just a byproduct. Focus on what you love and money will start falling from trees. Truth, half truth or copmpletely bull?

    Reply ↓
  28. The Curious Frugal

    # March 2, 2018 at 2:45 pm

    Until about a year ago, I really believed myth #2, “it’s not what you earn, it’s what you spend”. I’ve always been a frugal type person and so assumed things were all good there. I’ve only just started looking more into the earning side of the equation, and trying out some side hustles.

    Reply ↓
    • Paula Pant

      # March 6, 2018 at 5:12 pm

      That’s excellent! Congratulations!

      It sounds like you’ve mastered the frugal/saving side of the equation, which is awesome. This will pour rocket fuel onto your side hustle / earning more efforts.

      The combination of the two is ridiculously powerful!

      Reply ↓
  29. James

    # March 3, 2018 at 2:40 am

    Myth #3 – Money Doesn’t Matter

    This is interesting. It tends to be “rich” people that say this. People who don’t have to worry about money too much. People who struggle to pay their bills every month don’t say this.

    BUT

    I can see what entrepreneurs mean when they say things like “the money is not important”. You have to like what you do.

    If you actually like what you do, it makes life a whole lot more enjoyable.

    Reply ↓
    • Paula Pant

      # March 6, 2018 at 5:10 pm

      Absolutely. If you love your work, you’ll probably spend more time working + invest your energy into focusing on your work, which means you’ll probably do a better job. And that could result in more financial rewards.

      So loving your work (i.e. choosing a line of work that excites you) could lead to earning more money than you otherwise would if you chose a different profession/industry “for the money.”

      That’s a classic win-win. 🙂

      Reply ↓
  30. FU MON CHU

    # March 4, 2018 at 6:21 am

    I like myth #8.
    There seem to be a lot of people in the UK that believe that making a profit is greed, especially if it is related to renting out properties. What they don’t realise is that most landlords only have 1-2 properties and make very little money from it.

    Reply ↓
  31. Adrian - Investor Tuition

    # March 6, 2018 at 2:35 am

    Fabulous post. I am glad you explained the “money is the root of all evil’ quotation. It seems everyone believes it, rather than the correct saying of “the love of money is the root of all evil” Greed is the real problem, not the money. Very enjoyable reading. Regards Adrian

    Reply ↓
  32. Mighty Investor

    # March 6, 2018 at 6:36 pm

    I got you beat, Paula. I bought a car in New Zealand a while back for $150, drove it for nine weeks all over the north and south islands, then sold it for $200. I drive a hard bargain ;).

    I see you went to CU Boulder. I can feel the Boulderite all over these posts. I’m a native Coloradan.

    Love the combination of rigor and alternative values at Afford Anything.

    Reply ↓
    • Paula Pant

      # March 24, 2018 at 1:00 am

      Wow, you bought a car for $150?? You beat me!! That’s awesome!! Congratulations!!

      My car (in Boulder, Colorado) cost $400. The seller was asking for $450, but I talked him down. 🙂 I drove it for a year-and-a-half, then sold it for $200. My friends still talk about that car …

      Reply ↓
  33. Mayfair FX

    # March 13, 2018 at 5:51 pm

    I can’t agree more with Myth#2, I know so many people who focus only on earning more or spending less. One of my friends even got obsessed with spending less but never tried to earn more or work extra. My personal belief is that the key is to keep the balance always try to earn more, but never stop taking an eye on your spendings and if you can get a better deal with small extra effort never hesitate to do it.

    Reply ↓
  34. Vish

    # March 15, 2018 at 6:29 am

    “It’s not what you earn, it’s what you spend.” – I could relate this with my life as people often say me the same myth.

    Reply ↓
  35. Smile If You Dare

    # March 18, 2018 at 9:02 pm

    Myths, and myths about money.

    We humans believe in myths because we are trained to, because we need to, because of the fear of the unknown. We are inculcated from very young to believe what we are taught, what our elders believe, we believe what we are taught because we want to survive.

    But almost all myths are lies. Or half lies. There may be a grain of truth in some myths, but mostly myths exist to reinforce a particular cultural or economic world-view.

    Once we get old enough to think for ourselves (if that ever happens), we have the opportunity to question these beliefs. Unfortunately, questioning these myths is very hard… it is as difficult as questioning the religion one is brought up in or the cultural norms of of our elders.

    We can break out of the stranglehold of myths about money. The beginning is to question why we do things the way we do. If we are strong and persistence, we can some to real truths about the world that way it is, not how someone brainwashed us to believe.

    Reply ↓
  36. MH

    # March 26, 2018 at 4:03 pm

    Re: #4, I’ve got a further thought on the quote from 1 Tim 6:10… 🙂

    You wrote:
    ———-
    Money is the root of all evil.
    The actual quote is “for the love of money is the root of all evil.”
    ———-

    Your correction references the rather archaic KJV translation. More modern translations commonly render it as: “For the love of money is a root of all kinds of evil.”

    In other words it’s not saying that all evil is due to greed, but simply that greed is a cause of many varieties of evil. My version: “greed makes people do lots of bad stuff”. I don’t think it invalidates your broader point in any way, in fact perhaps even confirms it further. That is a very commonly misunderstood verse!

    Honestly, I think this is a very potent warning already, without trying to make it say more than it in fact does! I think when people misread it, they tend to discount the whole thing as silly/nonsensical, and then miss the completely valid point that is actually being made.

    For me that verse is a (probably more needed than I’d like to admit) reminder to examine my motives and heart attitudes toward money and material possessions. It reminds me to use the tool of money not just for my own comfort, but to help others (in addition to providing for what I and my family need).

    Reply ↓
  37. Liz

    # March 26, 2018 at 5:14 pm

    Ok, so how in the heck did I not see this blog post until now??? This is inspired work, Paula. Very original thought progressions as well as insights into our culture and psychology. I’m so glad this landed in my inbox today because I’m doing some digital minimization as I type this and unsubscribing from anything I don’t feel like adds value to my life as part of a course on minimalism I’ve been taking for the past couple of months. This adds a ton of value and I just forwarded it along to 3 people who I thought would also take some of these important tidbits to heart. Keep doing the great and original work you are doing!

    Reply ↓
  38. Banjoman15

    # March 26, 2018 at 5:56 pm

    Spot on!!
    Myths and lies cause problems for people to see beyond the natural, and affects everything they touch.
    Your financial advice is worth reading and digesting for those that have believed money is evil. Nothing is evil, it’s what do with it!
    Thanks

    Reply ↓
  39. Jay

    # April 30, 2018 at 11:59 am

    Great article! One that I always heard growing up but didn’t understand was “money doesn’t buy happiness”. I always though “Well sure, not directly”. From what i could see, money provides access to opportunities and experiences, as well as freedom. For me at least, those are related to my happiness.

    Reply ↓
  40. Tg

    # May 22, 2018 at 8:38 pm

    So good Paula. Good, good, good!

    Reply ↓
  41. Snarking to Freedom

    # August 12, 2018 at 7:08 pm

    ‘Don’t talk about money’ is perhaps not a myth but a social more that is very damaging. In Japan it is even harder to broach the subject, as people tend to be skittish about talking about ‘deep’ subjects, but it is necessary. I have so many friends who don’t save (forget invest) because they don’t hear about it as something normal.

    Reply ↓
  42. Abhishek malviya

    # November 12, 2018 at 7:19 am

    Oh.. first time in this blog and your writing is so refreshing!!

    Reply ↓
  43. Whitney Houghen

    # October 18, 2019 at 6:47 am

    Wow this is a very enlightening article. I am one of those that use to believe that money is scarce but after reading this my whole perception has changed. Thanks for the enlightenment.

    Reply ↓
  44. Jobarctic

    # October 18, 2019 at 10:02 am

    I love your style of writing very direct and explanatory. Money is a very important topic which we fear to discuss most times but you addressed the issue and gave the best insight thanks.

    Reply ↓

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