Personal finance is an integral, undeniable portion of an individual’s overall wellness, just as much as mental or physical health is part of the picture, for example. However, we often hold many misconceptions about personal finance before learning about the field. Check out these three common misconceptions regarding personal finance.
Credit Cards Are A Terrible Idea
The purpose of credit is to use things now that you can’t afford to buy outright with cash. Of course, the early purchase of such things – whatever they may be – must be paid off, almost always with added fees and interest.
In order to get better terms when borrowing things using credit, you absolutely need a great credit score. To build a credit score up, you need to begin borrowing. The easiest and safest way to do this is through credit cards.
Don’t ever run cards up to their maximum balances. Don’t charge more to credit cards than you can afford to pay back before the end of the billing cycle.
Keep in mind that if you pay down the balance on credit cards before the end of each billing cycle, zero interest accumulates! Credit cards can certainly be used irresponsibly, though they unarguably have tons of upsides.
Structured Settlements Are Identical To Annuities
Annuities are agreements between recipients and insurance companies in which the recipient forks over money to their insurer, after which the insurance company pays off the recipient in the future in the form of small, regular payments. Ultimately, the annuity pays off more money to the recipient than what is pledged to the insurer initially or otherwise provides a financial benefit to the recipient. This financial benefit could come in the form of deferred taxes or securing regular income flows during times in a recipient’s life where there aren’t sufficient flows of money coming in.
Money used to purchase annuities can be shuffled around to back different investments, helping the recipient more appropriately meet their personal financial goals – yet another benefit or purpose of annuities.
Structured settlements are simply schedules to pay recipients a certain, static dollar amount over time. While annuities and structured settlements do pay recipients off regularly and consistently, annuities are far more complex than simply being a structure used to funnel payments to recipients.CashInYourAnnuity.com
Renting Is A Waste Of Money
When you own a home, you’re responsible for repairs, maintenance, and upkeep. Oh, and property taxes each year. Also, failing to pay mortgage installments on or before the day they’re due can result in the lender foreclosing on your home. Further, people who buy homes are stuck with them until they can afford to pay them off.
Renters aren’t tasked with the responsibilities of fixing busted pipes or faulty water heaters, for example – landlords are. You’ll also get more lenience with being late on rent when it comes to the vast majority of landlords as opposed to being late on mortgage payments without facing foreclosure.
As a renter, you also have the liberty to hop around from one apartment or home to another just about as often as you want. Just make sure you only sign short leases and you can really start hopping around here, there, and everywhere. This is ideal for people who like change or who move regularly, or otherwise don’t like to be anchored to decisions for years upon years – if not decades upon decades.