Anti-Credit Articles

Myth Busters…Ripping Off a Popular TV Show

One of my favorite shows on the tube is Myth Busters on the Discovery channel. These two guys test out urban legends. You should check it out sometime. Now that I have plugged their show, I am going to completely steal their gimmick, and bust some myths here. Below are 4 personal finance myths that need busting.

  1. You should buy in bulk to save big bucks. Giant savings clubs like Sam’s and Costco appear to be great places for great deals, but be careful. If you buy more of an item than you can use in a timely manner, you may waste more money than you save. Remember, food and medicines can and often do go out of date long before you can use them. Meats can get freezer burn, fruits and veggies go brown, and even bulk meds can expire. Be sure that you will consume what you are buying. That huge vat of mayo or slab or steak might look like a great bargain, but think before you make such a purchase. Very often, cereal, bread, milk, cheese, and fruits go bad before we can eat them. Sometimes, paying a few cents more per ounce is worth it, if it saves you from having to throw out worthless, spoiled foods.
  2. A home equity loan is a great thing, because it is tax deductible. Listen, I am no tax expert, but the idea that I should consolidate my credit cards and auto loans into a loan backed by my home is ridiculous. This is your home, your place or rest, your place to have a family and rear your children. Do you really want to risk your home by taking out additional loans against its principle? Dave Ramsey calls these CONsolidation loans. If you take out a H.E.L. to “pay-off” your credit cards, and your charging habits do not change, in a few months or years, you will still owe on the H.E.L. AND you will have new credit card debt. CONsolidation loans don’t “pay-off” ANYTHING. They simple MOVE the debt around.
  3. Going into business with a family member will be a great thing. Listen, I love my family. I have great relationships with my family, my wife’s family, and with our extended families. The last thing I want to do is to burden down my family relationships with the pressures of a family business. If you must go into business with a family member, PLEASE, have documentation stating the exact financial and personnel roles that each family member will have. This is absolutely necessary. Nothing will ruin Christmas dinner faster than arguing over family business problems. (Don’t get me started with how crazy you would have to be to loan a family member money…Talk about uncomfortable.)
  4. There is “bad” debt, and there is “good” debt. Let’s face it, debt is debt. You owe somebody money for something that you are already using. Now, I will admit that certain items that you borrow money to buy can go up in value, while you are still paying for them. (A house, for example.) But the reality is, it would STILL be going up in value had you paid cash. Just because something is appreciating in value does not mean that borrowing money to purchase it makes since. If I had to categorize debt, I would do so like this. There is really, really stupid debt, like these pay-day, check-cashing scammers. There is really stupid debt, like credit card debt. There is stupid debt, like automobile debt. And there is just plain old debt, like a home loan. But please consider this…all of it is debt…You OWE all of it. Like the Word says… The borrower is slave to the lender. Now, you might be slave to the check-cashing guy, mastercard, visa, or countrywide, but, if you owe somebody money, you are enslaved. FIGHT FIGHT FIGHT. Pay that debt off NOW. Comments welcome.