No doubt you like to imagine that we are doing the very best we can with regards to our finances. We feel we have been saving money, but we've never actually sat down and done the mathematics. You may be surprised if you did.
Listed below are the top five money saving myths that we fall for:
1. Savings accounts save us money
Having money in a savings account for emergencies is a great idea. It's easy to get to, although not too easy. But if you are wanting to save money or make your money work for you, an old-fashioned savings account isn't necessarily the ultimate way to go. First, you have to have a look at what you're having to pay in interest rates. For instance, for people with a student loan with a 5% interest rate and a savings making 3% interest rate, your savings are costing you approximately 2%. You would be more well off eliminating that education loan together with your savings account.
It goes the other way round too. In case your debt has less of an interest rate than your savings, your hard earned money is working better in the savings. But with today's interest rates being so low, your debt is usually more than the quantity of interest you are generating on your savings account. That means that you are actually losing money.
Then if you never makes use of the item, you've actually wasted money. This can also pertain to bargain shopping and shopping in large quantities. No matter if you bought your daughter 35 pairs of shoes at yard sales for $1 each. If she only wore two pairs of them, you just wasted $33.
I used to be a shopaholic, and sales were my drug of preference. that you are not always saving cash. Yes, if you really needed the product, then you are saving money. But sales often result in the buying of products that normally would not be purchased. And you usually buy double the amount since it is on sale. Which means you haven't saved any money.
Then in the event you never make use of the item, you've actually wasted money. This could certainly also pertain to bargain shopping and shopping in large quantities. No matter if you bought your daughter 35 pairs of shoes at garage sales for $1 each. If she only wore two pairs of those, you simply wasted $33.
When you take out a card that has a zero percent repayment term, you're not saving money. You are just delaying paying for items. You don't save and also you don't spend more. However, if you don't pay for the cash back while in the zero percent period, you will end up paying interest on those items. That costs you cash.
When you refinance your home, you aren't necessarily saving that much cash in the longer term. Yes, your monthly bills are smaller, but you have refinanced for yet another 30-year term. This means that in case you have already paid A decade of mortgage, then refinance for an additional 30, you have basically extended your loan into a 40-year mortgage. Sit and do the math and you will definitely see if you are really saving anything.
If you want to reduce costs, refinance for a lower rate and a shorter term. Your monthly payment might not exactly go down, but your overall repayment may.
5. Savings relies upon income
Listed below are the top five money saving myths that we fall for:
1. Savings accounts save us money
Having money in a savings account for emergencies is a great idea. It's easy to get to, although not too easy. But if you are wanting to save money or make your money work for you, an old-fashioned savings account isn't necessarily the ultimate way to go. First, you have to have a look at what you're having to pay in interest rates. For instance, for people with a student loan with a 5% interest rate and a savings making 3% interest rate, your savings are costing you approximately 2%. You would be more well off eliminating that education loan together with your savings account.
It goes the other way round too. In case your debt has less of an interest rate than your savings, your hard earned money is working better in the savings. But with today's interest rates being so low, your debt is usually more than the quantity of interest you are generating on your savings account. That means that you are actually losing money.
Then if you never makes use of the item, you've actually wasted money. This can also pertain to bargain shopping and shopping in large quantities. No matter if you bought your daughter 35 pairs of shoes at yard sales for $1 each. If she only wore two pairs of them, you just wasted $33.
I used to be a shopaholic, and sales were my drug of preference. that you are not always saving cash. Yes, if you really needed the product, then you are saving money. But sales often result in the buying of products that normally would not be purchased. And you usually buy double the amount since it is on sale. Which means you haven't saved any money.
Then in the event you never make use of the item, you've actually wasted money. This could certainly also pertain to bargain shopping and shopping in large quantities. No matter if you bought your daughter 35 pairs of shoes at garage sales for $1 each. If she only wore two pairs of those, you simply wasted $33.
When you take out a card that has a zero percent repayment term, you're not saving money. You are just delaying paying for items. You don't save and also you don't spend more. However, if you don't pay for the cash back while in the zero percent period, you will end up paying interest on those items. That costs you cash.
When you refinance your home, you aren't necessarily saving that much cash in the longer term. Yes, your monthly bills are smaller, but you have refinanced for yet another 30-year term. This means that in case you have already paid A decade of mortgage, then refinance for an additional 30, you have basically extended your loan into a 40-year mortgage. Sit and do the math and you will definitely see if you are really saving anything.
If you want to reduce costs, refinance for a lower rate and a shorter term. Your monthly payment might not exactly go down, but your overall repayment may.
5. Savings relies upon income
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