Bustin'​ Money Myths

January 26, 2022

Myth #1: “All Debt Is Bad”

Dave Ramsey fans hold your horses. It's important to understand not all debt are created equally. Just like all assets are not treated equally. So allow me to categorize these areas into “good” or “bad” debt:

Good debt: Helps you increase your income or net worth in the future. The best example of this is a mortgage. While this might be a large liability to take on, you have the ability to acquire an asset like real estate.

Bad debt: Does the opposite due to high interest rates. An example of this is a traditional credit card that charges 20%+ APR. It’s intent is to buy material items that generally do not hold any significant value for your financial portfolio.

Lots of debt can be fit into either category, but there's one that can be debated: student loans. This debt will honestly depend on your situation or rather your goals. Remember, a degree for a doctor or lawyer is different than for a marketer or sales rep. We can leave this debate to our LinkedIn friends. But for the purpose of student loans, intention matters.

Myth #2: “You Must be Rich to Invest”

I like to remind everyone an important stat about millionaires: around 78% of millionaires today were created without an inheritance. This stat came from Dave Ramsey's remarkable millionaire survey (See I don't think he's all THAT bad!). While we can’t deny that an inheritance certainly helps, many have demonstrated the ability to become one without it. The reality is you can start at any point no matter what your income or net worth states. Because you can do the following right now:

  • Download an app
  • Create an account
  • Invest any amount
  • Invest in anything you want
  • Pay little to nothing out of pocket

This can be done in just less than an hour which otherwise would have cost you money and time just a decade ago.

[ RIP to stockbrokers ]

Myth #3: “Renting is a Waste of Money”

Yes...and no. As much as people like to say this is a waste, it's just not always true. Well, at least where you live it may not be. Remember, not every state operates the same and the difference between renting and buying can play a huge factor into the decision making process. The chart is a great visual that demonstrates these differences in each state.

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Owning a home can be an instrumental piece of building wealth for the traditional American household. Plus, people just love owning a home! But ownership costs add up that vary in each state like property taxes, repairs, insurance, and so on. Crunch the numbers and you’ll know which is the better option for you.  

Myth #4 “Investing is Missing Out on the Present”

I’m talking to the YOLO mob on this one.

Listen. I appreciate those with the mindset of living every day like tomorrow isn’t promised. But for almost the past 30 years of my life, I have been blessed to way wake every single day. Looking back at my decisions I’ve made 10 years ago, my present self is pleased with how my investments have grown since then. And I sure hope to make my future even more proud. Balance can be achieved by planting the seeds for your future and enjoying the process in between. However, that must be done with a delicate balance. Over utilizing one side will create an opportunity cost towards the other. Choose how your balance should scale.

Myth #5 “The Market is Too Complex to Invest In”

The stock market has gotten more complex over the last couple decades. But the process to get involved has been the opposite. The birth of index funds, ETFs, and even robo advisors have made it easier for the average investor to get involved without doing much of the heavy lifting. This plays into Myth #2 as well.

Now I want to be clear about this. It’s important to do your due diligence with every investment you make. Just because it's easy to start, that doesn't mean you shouldn't blindly invest. You need some due diligence for your decisions. But you also don’t have to be a trained Wall Street trader either. There is homework to do, but it doesn’t require a degree just to understand and get started.

Myth #6 “Money Doesn’t Buy You Happiness”

You read that right. People can achieve happiness not directly from money itself, but from how it can improve their livelihood. This is especially true for those who struggle to overcome financial hurdles such as paying emergency expenses and debt.

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We are even seeing new research that actually backs this point. Last year, a study by PNAS revealed correlation between those two variables after surveying over a million Americans. Check out the full study HERE.

Speaking from experience, I have helped people overcome debt and have never seen bigger smiles from their faces. Money doesn’t buy happiness. But it can steer us closer when done with the right intentions.

Myth #7 “More Income Equals More Wealth”

This is also one of those misconceptions I see regularly. Prior to working with me, many of my clients earning well over 6 figures would barely pay themselves. Meanwhile, there were those with half the income investing about twice as much. Income plays a major role to wealth creation, but it can’t be done if it’s all being spent away. It all comes back to where many financial problems can be solved: discipline. Many learn this one way or another.

And it's like we always love to say...

"The art is not in making money, but in keeping it"

Special shout out to The Richest Man in Babylon for teaching me this concept first. Great book.

#8 “It’s Too Late to Start Past Age _______”

It is only too late if you never start. Regrets come and go. But the biggest regret in life is acknowledging you did nothing about it. Lots of shame comes from comparing your journey to someone else's. The truth is you have way too many factors going on in your life to think your situation is just like anyone else's and vice versa. All it's about is what you will do today to shape your future self from now. Make them proud.


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