Home > 2014 > Personal Finance

3 Financial Fibs You Tell Yourself

Advertiser Disclosure Comments 0 Comments

Sometimes the same (bad) advice gets repeated so often people assume it’s true. But there are some common personal finance beliefs that aren’t necessarily true. We’ve broken them down for you:

1. You Can’t Save Until You’re Debt-Free

This is a tough one. If you find yourself in debt, you can feel overwhelmed by your financial obligations. You hear people saying you need to pay off student loans, credit card debt and possibly a mortgage all at the same time as others encourage you to save. The truth is you can, and should, do both.

Think about what got you into debt in the first place. Often for credit card debt it’s unexpected expenses like medical costs, car repairs, etc. These unexpected expenses will likely come up again in the future (making them somewhat expected!). So that you don’t have to put those on a credit card, it’s a good idea to have an emergency fund.

Paying off debt is certainly a good priority and you want to eliminate high-interest debt as quickly as possible. But try to set aside at least a small amount each month for savings as you work toward your debt-free life. Decide on a target (usually three to 12 months’ worth of expenses) and work toward it bit by bit. An automatic deposit from your checking to a savings account of only $25 a week will get you there eventually.

The important thing is that you are preparing for the future while eliminating your past problems. It will be very disheartening to work hard and pay off debt only to have to dive in again if you need money fast for an unexpected expense.

2. Sales Are a Good Buy

Finding an item you love (whether it’s a pair of shoes or a power tool) with a reduced price is always exciting. But if you find you are buying things only because they are on sale, and not because you need them, this could be a problem.

Seeing sale signs can lure you into a store or toward a particular product but it’s a good idea to do some research before you spend. First, you want to make sure that the sale is actually a deal. For example, check to see if you can find that item somewhere else at a lower price. Next, pause before you pay to determine if you really need the product or if you are buying mostly because you feel as if you are saving money.

Even when buying something on sale you are still spending money. It’s a good idea to shop with a list whether you are in the grocery store or hitting the outlet malls. If you make the list ahead of time, you can also search for coupons and compare prices between stores. That way you can confidently make your purchases instead of regretting impulse buys later on.

3. Buying Is Always Better Than Renting

When it comes to real estate, many people maintain that buying a home is always a good idea. One of the common arguments is that you are building equity instead of throwing away money by renting.

Home ownership has its perks, but that doesn’t mean it is always the right choice. Owning a home can have some tax advantages and allow you to build wealth. But there are some downsides to owning too — like maintaining a home and paying for repairs and upkeep.

Some of the factors to consider include how long you plan to live in the home, how much you have for a down payment, your income, how much debt you have and where you live. The answer to these questions can help you determine whether it is best for you to buy or whether you should keep renting.

More on Managing Debt:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team