myths http://www.wisebread.com/taxonomy/term/8566/all en-US Stop Falling for These 6 Social Security Myths http://www.wisebread.com/stop-falling-for-these-6-social-security-myths <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/stop-falling-for-these-6-social-security-myths" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/social_security_card_76556001.jpg" alt="Learning to stop falling for social security myths" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Over 166 million taxpayers pay into Social Security, which pays benefits to over 65 million Americans. As with any program as large and sprawling as Social Security, myths about how it works can run rampant &mdash; and since the facts tend to require more than a sound bite to explain, those myths become entrenched in our collective consciousness as fact.</p> <p>But not only are these Social Security myths untrue, believing them can cause you to make poor decisions about your Social Security benefits. Here are six of the most common and harmful myths about Social Security, debunked:</p> <h2>1. The Government Is Raiding the Social Security Trust Fund</h2> <p>You will often hear people complain about how untrustworthy our government is, and offer the fact that Congress &quot;raids&quot; the Social Security Trust Fund as proof. While it is true that the Trust Fund is where excess Social Security taxes are placed for future beneficiaries, and it is also true that the government uses money in this account to pay for government programs, it is simply not true that the fund is being &quot;raided.&quot;</p> <p>Here's what's going on. Money placed in the Social Security Trust Fund may sound like it is being put in a vault somewhere for the safekeeping of future beneficiaries. But that's not how money works. Not only would that be a security risk, but the money in such a vault would lose value to inflation. In order to maintain and increase the value of the trust fund, the money must be invested in government programs.</p> <p>Think of it this way: Any time you invest money commercially &mdash; whether by putting it in an interest-bearing bank account or by buying stocks or bonds &mdash; you are probably aware that the institution is immediately spending the money you have invested. The private institution spends your investment with the understanding that it will earn profits and be able to pay you back, with interest.</p> <p>The government is no different. It spends money invested in the Social Security Trust Fund on infrastructure, military spending, government salaries, welfare, and the like, knowing that those investments will earn interest. But unlike a private institution, this kind of government spending is backed by the full faith and credit of the U.S. government.</p> <p>The government's spending of money from the Social Security Trust Fund is just as valid a use of invested money as is the lending and spending that a bank or corporation does with investors' money.</p> <h2>2. Social Security Is Going Bankrupt</h2> <p>This myth is based on a kernel of truth &mdash; specifically, Social Security benefit payments exceed payroll tax revenues and have done so since 2010. In order to maintain promised benefits, Social Security has had to dip into the Social Security Trust Fund. As of 2013, the Trust Fund began losing value, and it will become entirely depleted by 2037.</p> <p>This is the point at which most analysis stops, and that is why you will often hear the myth that Social Security is circling the drain. But it is impossible for Social Security to go bankrupt, because it was always designed as an immediate transfer of funds from current workers to current beneficiaries. (When there were more workers than beneficiaries, excess taxes were placed in the Trust Fund. This was the case until 2009). The program does not count on a specific pool of money, but on the tax revenue of current workers.</p> <p>That being said, once the Trust Fund is depleted, tax revenue is only expected to pay for approximately 79% of promised benefits. This is the shortfall you will hear experts referring to when discussing the future of Social Security. But it does not spell the end of the program. It is just a shortfall that we need to find a way to make up.</p> <p>Social Security was created specifically so it could be changed and tweaked to meet the changing needs of Americans &mdash; changing needs like this anticipated shortfall. We might have little faith in Washington right now, but it is specifically the job of our government to make changes to Social Security to deal with this coming shortfall. Eventually, they'll get around to it.</p> <h2>3. It's the Baby Boomers' Fault We're in This Mess</h2> <p>There are plenty of articles out there that place the blame for Social Security's financial woes squarely at the feet of the baby boomer generation &mdash; the largest-ever generation of Americans, born between 1946 and 1964. There are 76 million baby boomers, and having that many people retire over a couple of decades places an enormous burden on Social Security. Since our system is based upon an immediate transfer from current workers to current retirees, having the boomers retire all at once puts too many retirees into the equation.</p> <p>But the boomers' retirement is hardly a surprise. They've been around for six or seven decades now, and we have seen this mass boomer retirement phase coming for many years. According to Virginia P. Reno and Joni Lavery in the Social Security brief <a href="https://www.nasi.org/usr_doc/SS_Brief_022.pdf">Can We Afford Social Security When Baby Boomers Retire?</a>, &quot;Policymakers began to plan as early as 1983, when Congress lowered the cost of Social Security benefits for boomers and later generations by raising the age at which unreduced retirement benefits will be paid.&quot;</p> <p>Believe it or not, our government has been trying for quite some time to prepare for this moment. Part of the reason we had such a surplus in the Social Security Trust Fund was because of our preparation for the mass retirement of the boomer generation. We are far better prepared for the boomers than many doomsayers might have you believe.</p> <h2>4. Waiting for Benefits Means You Risk Not Getting Your Fair Share</h2> <p>It is possible to take Social Security benefits as early as age 62, although your benefits will be permanently reduced by up to 25% to 30 percent by taking them early. Wait until your full retirement age (66 for individuals born between 1943 and 1954, rising to age 67 for anyone born in 1960 or later), and you will receive your full benefits. If you can wait until age 70, you will receive delayed retirement credit equal to approximately 8% per year between your full retirement age and 70.</p> <p>If you calculate the break-even analysis on your Social Security benefits, it often looks like you're better off by taking early benefits. Early, reduced benefits offer you more lifetime benefits for nearly 15 years into the break-even analysis.</p> <p>The problem with this thinking is that the only way for you to &quot;win&quot; these calculations is to die young. It would actually be far worse for you to take early benefits and then live a long life on a reduced income. It is much smarter to delay your benefits as long as possible to provide yourself with the largest benefit you can get.</p> <h2>5. Immigrants Are Taking Social Security Benefits They Didn't Pay For</h2> <p>This myth is an election year favorite, and it conflates Social Security benefits with Supplemental Security Income (SSI) benefits. Social Security benefits are only available to beneficiaries who either paid into the system themselves, or who are the dependents of those who paid into the system. If you have not paid any Social Security payroll taxes (or you haven't been the dependent of someone who has), you are not getting Social Security benefits. Period.</p> <p>SSI, on the other hand, is a welfare program designed to provide aid to the elderly and disabled, and SSI benefits are paid through general governmental revenues. Immigrants are eligible to collect SSI benefits, but only if they show the same level of extreme need as any other SSI beneficiary.</p> <h2>6. Privatizing Social Security Would Make the System Fairer</h2> <p>The possibility of privatizing Social Security is a common suggestion for fixing many of the problems inherent in such a large government program. These suggestions often promise that privatization will be cheaper for the government, more lucrative for beneficiaries, and fairer for everyone since you will get out what you put in.</p> <p>Unfortunately, none of those three promises would be true. Social Security is a very efficiently run program, with administrative expenses totaling less than 1% of the program's budget. But creating and maintaining individual investment accounts would be incredibly expensive, since it would incur broker commission fees and/or mutual fund management fees, which would either come from the program budget or individual investors.</p> <p>In addition, it is unlikely that the majority of beneficiaries would be able to improve upon their Social Security &quot;return on investment&quot; through investment accounts, since humans are notoriously irrational investors. Social Security benefits are guaranteed, while investment returns are not.</p> <p>Finally, attempting to create pay-for-what-you-get fairness in a social insurance program like Social Security is a non-starter. The intention of Social Security is to provide guaranteed income to the elderly, the disabled, and their families, by spreading the cost of that income over all of society. Strict fairness in such a system would leave our most vulnerable citizens in abject poverty or worse. It's also important to note that the transition costs of privatizing Social Security have been estimated at nearly <a href="http://www.ncpssm.org/Document/ArticleID/14">$5 trillion over the first two decades</a>. Those costs would need to be paid by current workers, who would potentially be paying into their privatized accounts and still be paying taxes that go toward current beneficiaries &mdash; which would feel incredibly unfair.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/stop-falling-for-these-6-social-security-myths">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-smart-ways-to-boost-your-social-security-payout-before-retirement">6 Smart Ways to Boost Your Social Security Payout Before Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tiny-nestegg-retire-abroad">Tiny Nestegg? Retire abroad!</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-plan-for-retirement-when-you-re-ready-to-retire">How to Plan for Retirement When You’re Ready to Retire</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-financial-moves-now-that-youll-regret-when-you-retire">5 Financial Moves Now That You&#039;ll Regret When You Retire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-american-cities-where-you-can-retire-on-just-social-security">5 American Cities Where You Can Retire On Just Social Security</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Retirement baby boomers benefits Congress full retirement age government immigrants myths privatized social security ssi Mon, 07 Nov 2016 10:30:29 +0000 Emily Guy Birken 1827091 at http://www.wisebread.com Flashback Friday: 38 Money Misconceptions We Need to Stop Believing http://www.wisebread.com/flashback-friday-38-money-misconceptions-we-need-to-stop-believing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/flashback-friday-38-money-misconceptions-we-need-to-stop-believing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_thinking_money_71649889.jpg" alt="Woman hearing money misconceptions she needs to stop believing" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Making assumptions and spreading rumors leads to a universe packed with myths and lies. And while some might seem obviously untrue, a lot of people might still believe them! Let's do away with all that malarkey, shall we? It's time to seek the truth when it comes to cash. Here are 38 money misconceptions we need to stop believing.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/woman_cash_000082536961.jpg" width="605" height="340" alt="" /></p> <p><a href="http://www.wisebread.com/4-common-money-misconceptions-about-women?ref=fbf">4 Common Money Misconceptions About Women</a> &mdash; It's 2016, and sadly, women are still commonly stereotyped as sheltered homemakers and impulse shoppers. And personally, I know plenty of men who love to shop and women who are the breadwinners of their families, so I'm sure that you do, too.</p> <p><a href="http://www.wisebread.com/the-10-biggest-myths-about-investing?ref=fbf">The 10 Biggest Myths About Investing</a> &mdash; When you're an investing newbie, the whole process can seem scary. But just because you take a financial risk doesn't mean you'll lose all your money and end up with nothing. Just a little time and basic investment knowledge will ease all those concerns.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/happy_millennial_man_000057999652.jpg" width="605" height="340" alt="" /></p> <p><a href="http://www.wisebread.com/6-money-misconceptions-about-millennials?ref=fbf">6 Money Misconceptions About Millennials</a> &mdash; Millennials might seem like a generation too preoccupied with taking selfies to learn how to manage their money, but that assumption is completely wrong. Millennials are hustlers, social media mavens, and are ruling the gig economy. Do not underestimate them.</p> <p><a href="http://www.wisebread.com/6-harmful-money-beliefs-that-are-keeping-you-poor?ref=fbf">6 Harmful Money Beliefs That Are Keeping You Poor</a> &mdash; Yep, your outdated money views could be holding you back from the financial freedom you seek. Credit card debt is not just &quot;part of life,&quot; and you can find a way to save money earning any income. Stop settling for mediocre when your finances can be stellar.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/piggy_bank_lifesaver_000017436066.jpg" width="605" height="340" alt="" /></p> <p><a href="http://www.wisebread.com/6-emergency-fund-myths-you-should-stop-believing?ref=fbf">6 Emergency Fund Myths You Should Stop Believing</a> &mdash; Building an emergency fund seems impossible and unnecessary, especially for people living paycheck-to-paycheck&hellip; until it could save your life. That's why it's called an &quot;emergency&quot; fund. You hopefully won't need it for a while, but when you do, you'll be so grateful you worked so hard to build it.</p> <p><a href="http://www.wisebread.com/6-money-myths-about-stay-at-home-moms?ref=fbf">6 Money Myths About Stay-At-Home Moms</a> &mdash; Oh you think stay-at-home moms have it made in the shade? You assume they sleep in, just casually run errands, and hang on the couch all afternoon? You are way off. SAH moms of today are finding brilliant ways to multitask and make money while also raising the kids. They are handling more responsibility and taking on more work than most. Let's stop believing the myths and give them the proper respect they deserve.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/chrissa-hardy">Chrissa Hardy</a> of <a href="http://www.wisebread.com/flashback-friday-38-money-misconceptions-we-need-to-stop-believing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-38-money-lessons-we-can-learn-from-celebrities">Flashback Friday: 38 Money Lessons We Can Learn From Celebrities</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-47-brilliant-ways-to-save-money-on-dinner">Flashback Friday: 47 Brilliant Ways to Save Money on Dinner</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-85-best-ways-to-save-on-halloween-this-year">Flashback Friday: 85 Best Ways to Save on Halloween This Year</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-34-ways-fitness-can-improve-your-finances">Flashback Friday: 34 Ways Fitness Can Improve Your Finances</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-44-sneaky-shopping-traps-to-avoid">Flashback Friday: 44 Sneaky Shopping Traps to Avoid</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Frugal Living budgeting debunked fbf flashback friday frugal living lies money lies money misconceptions myth buster myths Fri, 28 Oct 2016 10:00:12 +0000 Chrissa Hardy 1822096 at http://www.wisebread.com 5 Unfounded Credit Card Fears http://www.wisebread.com/5-unfounded-credit-card-fears <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-unfounded-credit-card-fears" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/000014443696.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="141" /></a> </div> </div> </div> <p>Credit cards get plenty of bad press. Scan the web and you'll find countless stories of consumers who've run up thousands of dollars of high-interest rate debt, fallen behind on their monthly payments, and destroyed their credit scores.</p> <p>But credit cards, if used responsibly, are important financial tools. They're safer than cash. They can actually <a href="http://www.wisebread.com/how-to-use-credit-cards-to-improve-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">help you build your credit score</a>. They often come with valuable rewards programs. And you won't have to worry about those high interest rates if you're disciplined enough to charge only what you can afford to pay back each month.</p> <p>Are unfounded fears keeping you from using credit cards? If so, it's time to stop. Here are five credit card fears that have been overblown, and the truths that debunk them.</p> <h2>1. Credit Cards Will Ruin My Credit Score</h2> <p>True, lenders rely on your FICO (and other) credit scores to determine if you qualify for loans. They also use these scores to set the interest rates attached to your loans. Credit scores are important. It's natural for consumers to worry that charging too much will send their scores plummeting. But the truth is, using credit cards responsibly will actually boost your credit score.</p> <h3>The Truth</h3> <p>Every time you pay your credit card bill on time, you are helping your credit score. According to <a href="http://myfico.7eer.net/c/27771/93942/2185">myFICO.com</a>, 35% of your credit score is made up of your payment history. Establish a history of paying your bills on time, and you'll be on your way to building a good credit score. Just be careful to not carry a large balance on your card each month. First, you'll pay too much in interest. Secondly, using too much of your available credit will <a href="http://www.wisebread.com/10-surprising-ways-to-negatively-affect-your-credit-score?utm_source=wisebread&amp;utm_medium=internal&amp;utm_campaign=cc_article">hurt your credit score</a>.</p> <h2>2. I'll Pay a Ton in Interest</h2> <p>It's true that if you misuse your credit card, you will pay plenty in interest. It's not unusual for credit cards to come with interest rates of 19% or higher. If you carry a large balance each month, your interest charges will skyrocket. But again, if you use your credit card wisely, you'll have nothing to fear from high interest rates. (See also: <a href="http://www.wisebread.com/the-best-low-interest-rate-credit-cards?utm_source=wisebread&amp;utm_medium=seealso&amp;utm_campaign=cc_article">Best Low Interest Rate Credit Cards</a>)</p> <h3>The Truth</h3> <p>Credit cards work best for people who pay off their balances in full each month. If you do this, your credit card's interest rate won't matter because you won't ever pay interest on your debt. You only pay interest when you don't pay off your balance in full with every statement. If you do find yourself carrying an ever-growing balance each month, though, it's time to stop using your card and focus on paying down that debt.</p> <h2>3. Someone Will Steal My Card and Run Up Tons of Debt</h2> <p>It's true that thieves can steal your credit cards. They might also steal your card's information and use it to make online purchases. But credit cards are actually safer than cash.</p> <h3>The Truth</h3> <p>Consumers, if they report their card stolen or lost in a timely fashion, aren't responsible for unauthorized charges on their credit cards. If someone steals your card and charges thousands of dollars, you can dispute the illegal purchases and your credit card company won't charge you for them. Under federal law, you won't be responsible for any fraudulent charges if you report your card stolen or lost before any charges are made on it. If you report your card stolen or lost within two business days and charges have already been made, you are only responsible for a maximum of $50 worth of those fraudulent purchases, though most credit card providers will waive even that.</p> <p>Compare that to cash: If someone steals $100 from your wallet, that money is likely gone forever.</p> <h2>4. Applying for Credit Cards Will Hurt My Credit Score</h2> <p>Your credit score will take a small hit when you apply for new credit. That's because whenever you apply for a new credit card, what is known as a hard inquiry is added to your three credit reports. A hard inquiry hurts your score because every time you take on a new line of credit, you are exposing yourself to the possibility of running up debt that you can't afford. But the reality is, the damage from applying for credit cards prudently, is minimal.</p> <h3>The Truth</h3> <p>If you apply for a single credit card, that hard inquiry will typically drop your FICO credit score by about five points. That's not much, and it won't take long for that small dip to disappear. Keep paying your bills on time and don't run up credit card debt, and that five-point loss will evaporate. But if you apply for, say, six credit cards at the same time? That can cause a bigger drop in your credit scores. So apply prudently: Don't fill out more than one credit card application at a time.</p> <h2>5. I'm Worried That I'll End Up in Jail if I Can't Pay</h2> <p>There is no such thing as debtor's prison in the United States. Even so, consumers might fear that if they can't pay their credit card bills, they'll end up in jail. This simply isn't true.</p> <h3>The Truth</h3> <p>The only way credit card debt can send you to jail is if you willingly commit fraud. Otherwise, no matter how much you owe, you won't spend time behind bars. No matter what creditors say, you can't be jailed for credit card debt. That doesn't mean, however, that you won't face consequences if you can't pay your credit card bills. For instance, your credit card company might be able to garnish your wages as a way to force you to pay up.</p> <p><em>Do you harbor any of these &mdash; or other &mdash; credit card fears?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/5-unfounded-credit-card-fears">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-a-solid-credit-score-saves-you-money">How a Solid Credit Score Saves You Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-5-common-mistakes-while-rebuilding-your-credit">Avoid These 5 Common Mistakes While Rebuilding Your Credit</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most">The 7 Debt Payoffs That Boost Your Credit Score the Most</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-four-cs-of-applying-for-and-managing-your-credit">The Four C&#039;s of Applying for and Managing your Credit</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-things-you-think-affect-your-credit-score-but-dont">10 Things You Think Affect Your Credit Score — But Don&#039;t</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards credit card theft credit score debt fico high interest rates jail myths Wed, 18 May 2016 09:30:25 +0000 Dan Rafter 1712216 at http://www.wisebread.com 6 Money Myths About Stay-At-Home Moms http://www.wisebread.com/6-money-myths-about-stay-at-home-moms <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-money-myths-about-stay-at-home-moms" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000054774912_Large.jpg" alt="busting stay at home mom myths" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For most of the last five years, I've been a stay-at-home mom. Now, I've also done other things (like write for Wise Bread!) because I just can't help myself, but most of that time has been spent with my kids. I've wiped tears, changed diapers &mdash; the whole bit. And I chose that. It's what worked best for our family at the time, for a number of reasons.</p> <p>I've talked to a lot of people about my choice to stay home while the kids were little and, along the way, I've run into a lot of misconceptions like, &quot;So, you wear pajamas all day, right?&quot; Um, no. We actually leave the house most days.</p> <p>And a good number of those misconceptions are financial, or have financial implications. I have found these conversations both interesting and frustrating. Interesting, because I have come to know and understand how other people see me, and frustrating because they are usually so, so wrong. (See also: <a href="http://www.wisebread.com/4-common-money-misconceptions-about-women?ref=seealso">4 Common Money Misconceptions About Women</a>)</p> <p>Here are a few common myths about stay-at-home moms. Hopefully, this list will help you think about staying at home &mdash; or about friends who already stay at home &mdash; differently.</p> <h2>1. SAHMs Don't Make Money</h2> <p>I've had a good number of people assume that staying at home with my kids is all or nothing. I'm either out there working and bringing in income, or I'm at home, making zero dollars. The truth is, there's a huge amount of middle ground between those two scenarios. If we have an unexpected expense, I pick up writing and editing jobs to help cover it. If we decide we want to go on a trip that exceeds our current budget, I do the same thing.</p> <p>Most of the stay-at-home moms I know have some sort of side job that they do when or if they need to make some money. Sure, they don't bring in as much as they used to, but they are not entirely dependent on their significant other's income, either. And they do everything. So staying at home doesn't necessarily mean bringing in zero income.</p> <h2>2. SAHMs Wish They Made Money</h2> <p>I've had so many people ask me if it's hard for my husband and I to have him bringing in the majority of the income. &quot;Don't you wish you could at least make your own spending money?&quot; they'll ask.</p> <p>The truth is, before I started staying home with our kids, we had some hard conversations. Through those, we made decisions. All of our money, right now, is ours. It's not his or mine, but ours. What he brings in and what I bring in both go into a communal pot, and we can both spend from there as we see fit. We also budget together, so we jointly decide on financial goals and pursue them together.</p> <p>That's not to say that I never wish that I was making more money. But me staying home is a decision we made together, and my lack of income is not causing problems in my marriage.</p> <h2>3. SAHMs Are Penny Pinchers</h2> <p>Some people think that my family lives in borderline poverty because I stay at home. They assume that I clip coupons, shop sales, know thrift stores well, etc. While I'd probably be a better manager of our funds if I did all of that, I don't. I don't have to be frugal all the time, because we've budgeted in such a way that we have some financial freedom even though I'm not working.</p> <p>Not all stay-at-home moms are penny pinchers. I know myself, and I know that I'd go crazy if I had to make sure I saved on everything, so we have structured our lives in such a way that I don't. Sure, I love sales as much as the next person, but I don't limit myself to them.</p> <h2>4. SAHMs Spend Too Much</h2> <p>On the other hand, some people think that, because I stay at home, I spend a lot of money. I think these people have a picture in their head of a &quot;yummy mummy,&quot; or a wealthy housewife on a reality show, and that's not just me, nor is it any of the stay-at-home moms I currently know. Being at home really hasn't changed how I think about spending, though I do buy different things now than I used to.</p> <p>I've even had people say things like, &quot;Oh, you must, like, spend so much at Starbucks.&quot; Nope. I didn't buy a lot of expensive coffee before I stayed at home and I don't now. I suppose that someone who overspends before they stay home would be likely to continue those habits, but there's nothing inherent in staying home that makes a person develop expensive habits.</p> <h2>5. SAHMs Feel Like Slaves</h2> <p>&quot;But you're working for nothing,&quot; one friend said to me. &quot;Doesn't that get to you?&quot; I smiled. Not only am I saving the cost of daycare for three small children &mdash; which is not cheap, at least in our neck of the woods &mdash; but I'm doing jobs <a href="http://time.com/money/3461539/financial-habits-stay-at-home-parents/">worth over $110,000 a year</a>. Sure, I don't see that money, but I don't have to spend it, either!</p> <p>I think that some stay-at-home moms do end up feeling like slaves or servants, but most of us don't. Personally, I went into this gig with my eyes open. Sure, there's lots of manual labor, many not-so-glorious moments, and more tears and whining that I can honestly say I needed to hear, ever. But there is also the laughter, learning new things, and the moments of heartbreaking kindness that I wouldn't have seen otherwise.</p> <p>I'm not a slave. I simply chose to do some difficult things in exchange for some good ones. And which of us hasn't made that choice, sometime in our lives?</p> <h2>6. SAHMs Have It All</h2> <p>This is one of the misconceptions about being a stay-at-home mom that I run into the most, usually from other moms who have chosen to work full-time. &quot;Oh, you have it all,&quot; they will say. &quot;You're financially secure and you get to stay at home. I wish I could do that.&quot;</p> <p>Truthfully, we make sacrifices for me to stay at home. We don't drive new cars. We live in a house that is smaller, older, and less updated than those of most of our friends. We take low-key and inexpensive vacations, if we travel at all. My husband works more overtime than he'd like, so we can pay our bills.</p> <p>On the flipside, our financial security is wrapped up in one job, one company. If something ever happens to that, we will be in a world of hurt. All of our eggs, as they say, are in one basket.</p> <p>Is all of this worth it? Right now, yeah. Absolutely. But I don't have it all. I have simply chosen one set of sacrifices and joys over another.</p> <p><em>What are some other myths about stay-at-home moms (or dads)? Share with us in the comments!</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-money-myths-about-stay-at-home-moms">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-38-money-misconceptions-we-need-to-stop-believing">Flashback Friday: 38 Money Misconceptions We Need to Stop Believing</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-keep-anxiety-from-ruining-your-budget">5 Ways to Keep Anxiety From Ruining Your Budget</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/could-you-save-money-by-subscribing-to-an-addictive-game">Could you save money by subscribing to an addictive game?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-tips-from-playbook-for-tough-times-thatll-help-you-live-your-best-life">5 Tips From &quot;Playbook For Tough Times&quot; That&#039;ll Help You Live Your Best Life</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-surprising-ways-summer-will-cost-you">7 Surprising Ways Summer Will Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living Lifestyle common myths finances money misconceptions myths stay-at-home mom stereotypes Tue, 05 Apr 2016 10:30:10 +0000 Sarah Winfrey 1684936 at http://www.wisebread.com The 10 Biggest Lies We Tell Ourselves About Money http://www.wisebread.com/the-10-biggest-lies-we-tell-ourselves-about-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-10-biggest-lies-we-tell-ourselves-about-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_cash_mouth_000051776556.jpg" alt="Man telling biggest lies to himself about money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to personal finance, honesty is the best policy. Be honest with banks, be honest with your family, but most of all, be honest with yourself.</p> <p>It's a frequent occurrence that people find themselves in financial trouble because they weren't honest about their money situation. But recognizing the most common lies is one key to moving toward a more honest &mdash; and profitable &mdash; future.</p> <p>Here are some of the biggest money lies we tell ourselves.</p> <h2>1. &quot;It's Good Debt&quot;</h2> <p>It's often said that there's such a thing as &quot;good debt&quot; and &quot;bad debt.&quot; The so-called &quot;good debt&quot; may stem from student loans or your mortgage, which can play a role in building long-term wealth. &quot;Bad debt,&quot; on the other hand, is most commonly from credit cards with high interest rates. But by separating debt in this way, it's easy to rationalize having debt in the first place. It's true that some kinds of debt are worse than others, but it's wisest to try to avoid debt altogether. Only by having an &quot;all debt is bad&quot; attitude will you aggressively try to rid yourself of of it.</p> <h2>2. &quot;I'm Earning a Return of X%&quot;</h2> <p>When we place money in the stock market, we often assume it's generating a certain amount of return, based on historical averages. It's good to be aware of these historical returns in order to understand the potential of stock market investing, but you must remember that past performance does not guarantee future results. It's also important to have a true understanding of how well your investments are doing. Thornburg Investments issued a report in 2014 outlining how the S&amp;P 500 Index earned an <a href="http://www.thornburginvestments.com/pdfs/th1401.pdf">11% annualized nominal return</a> over 30 years, but that return was actually 6% annually once taxes, fees, and inflation were factored in.</p> <h2>3. &quot;I'll Start Saving Later&quot;</h2> <p>Retirement always seems like such a long way off. We tell ourselves that we have plenty of time, and many years ahead before we need to start putting money away. But before we know it, retirement age is on our doorstep and we've hardly saved at all. And because we waited, we missed out on the power of compounding returns. It's easy to come up with reasons not to save money, but very few of them are valid. Consider your retirement fund to be the first bill you need to pay each month. You won't miss the money now, but you'll be happy to have it down the road when you stop working.</p> <h2>4. &quot;I'll Be Earning More in the Future&quot;</h2> <p>When planning our future, we often do a good job of predicting expenses, but operate under the faulty assumption that our incomes will increase. I know people who have purchased larger homes than they can truly afford, justifying the expense by arguing that they'll be getting pay raises down the road. We all want to assume we'll be earning more as time goes on, but there are no guarantees. Your company may freeze wages, or even lay off workers. You may decide to stop working to raise your family. To achieve financial freedom, work to ensure your spending is less than your actual current income. This way, any pay increases you receive are like bonuses.</p> <h2>5. &quot;I Don't Have Enough to Invest&quot;</h2> <p>If you have money for that morning trip to Starbucks, then you have money to invest. If you have money for Netflix, or those pricey new shoes, or that bottle of wine, you have money to invest. The key to financial freedom is ultimately about what we choose to spend our money on. And if you prioritize long-term saving over buying non-essential material goods, you'll find that you have much more money to invest than you think.</p> <h2>6. &quot;I Deserve This&quot;</h2> <p>One common way people end up overspending is that they rationalize the purchase of things they don't need. Splurging on things like an expensive dinner or even a pricey Caribbean vacation is followed by an explanation like &quot;I've worked hard this year,&quot; or &quot;I need a treat.&quot; This is not to say that you should never splurge or celebrate, but when this type of spending becomes routine, it can really put a dent in your savings. If you change your thinking and instead give yourself a pat on the back for avoiding an impulse purchase, you'll be better off financially.</p> <h2>7. &quot;I Saved Money on This Purchase&quot;</h2> <p>It's impossible to save money if you are spending it. If you rationalize a purchase by pointing out that it was on sale, or that you used a coupon, you are ignoring the fact that money still exited your wallet. Remember that retailers roll out coupons and sales to encourage people to spend money. The only way to determine if you truly &quot;saved&quot; money on an item is if it was something you were planning to purchase anyway.</p> <h2>8. &quot;I Got Approved for This Credit Card, So My Debt Can't Be Too Bad&quot;</h2> <p>If a credit card company is sending you an application for a new card, they must think you're financially responsible, right? Wrong. Even people with horrendous credit can get approved for cards. And if you already have credit card debt, the last thing you want to do is open a new card that will allow you to rack up even more. While it's true that credit card companies would prefer that you not go bankrupt, they're more than happy to keep accepting your payments with high interest rates.</p> <h2>9. &quot;I'm Young, I Don't Need Health Insurance&quot;</h2> <p>If you're in your 20s and rarely get sick, it may seem like health insurance is an expense you don't need to bother with. But tell that to the guy who got into a car accident or who tore his ACL in the pickup soccer game. Without health insurance, you're exposing yourself to potentially catastrophic medical expenses if something bad occurs. Make sure to sign up for insurance through your employer or search for low-cost plans on HealthCare.gov.</p> <h2>10. &quot;I Get Paid Well, So This Crappy Job Is Worth It&quot;</h2> <p>Stories abound of people who stayed in jobs they hated, simply because it offered financial security. Don't get us wrong &mdash; financial security is huge , and it's not necessarily smarter to take a job you love if you can't pay your bills. But if you live sensibly and spend wisely, you may be able to find a middle ground where bills get paid and you're also happy in your work. Remember, too, that well-paying jobs can sometimes lead to lifestyle inflation, where you buy larger and more expensive things just because you can.</p> <p><em>How many of these lies have you told yourself? How many others we haven't included?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/the-10-biggest-lies-we-tell-ourselves-about-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-personal-finance-letter-id-write-to-my-younger-self">The Personal Finance Letter I&#039;d Write to My Younger Self</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-things-football-teaches-us-about-money">9 Things Football Teaches Us About Money</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-money-moves-to-make-the-moment-you-get-a-promotion">8 Money Moves to Make the Moment You Get a Promotion</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-frugal-colonizers-guide-to-getting-to-mars">The Frugal Colonizer&#039;s Guide to Getting to Mars</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-siri-can-be-your-personal-finance-assistant">9 Ways Siri Can Be Your Personal Finance Assistant</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance debt investing lies we tell ourselves myths overspending saving Splurging Tue, 15 Mar 2016 11:30:05 +0000 Tim Lemke 1670512 at http://www.wisebread.com 6 Emergency Fund Myths You Should Stop Believing http://www.wisebread.com/6-emergency-fund-myths-you-should-stop-believing <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-emergency-fund-myths-you-should-stop-believing" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_lifesaver_000017436066.jpg" alt="Learning myths about starting emergency fund" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Starting an emergency fund can feel like a daunting prospect. On top of <a href="http://www.wisebread.com/5-important-things-to-know-about-your-401k-and-ira-in-2016">saving for retirement</a> and key financial goals &mdash; not to mention just covering the daily necessities &mdash; putting money away for a rainy day can seem overwhelming.</p> <p>But don't let negative thinking or unfounded myths prevent you from securing your financial future. Here are six common (and completely useless) myths you'll encounter on your way to building an emergency fund.</p> <h2>1. I'm Too Old</h2> <p>You are never, ever too old to start saving money. Whether you've never done it before or you've survived a financial disaster and are starting over, it doesn't matter how old you are to begin saving for contingencies.</p> <p>The purpose of an emergency fund is to help you make sure that you have back-up money in case something bad happens. Maybe you lose a job, or someone gets sick, or your car needs a repair. All of these unexpected expenses can cause you to go into debt if you don't have funds set aside. And they can happen at any point in your life, which means you should always be prepared.</p> <p>So start your fund, regardless of your age. Even if you feel like you'll never save as much as you want or need, every dollar you put away will be helpful if something bad happens.</p> <h2>2. I'm Too Young</h2> <p>Young people tend to feel invincible, and it's easy to think, &quot;Oh, I'm not going to get sick. I've got a good job and my car runs well, so I'll start saving later.&quot;</p> <p>The problem with this thinking is that bad things do happen to young people. It's rare, but they do get seriously ill. A good job can be lost. A great car can be totalled in an accident. And an emergency fund can make all of these situations easier to get through.</p> <p>Also, just because it's less likely that something bad will happen soon doesn't mean that you don't need to start saving <em>now</em>. The more you save now, the more you will have when unexpected negative financial events do come your way!</p> <h2>3. I Have Too Much Debt</h2> <p>It's easy to feel like you should pay off all your debt before you even think about putting some money away. However, not having an emergency fund often leads to more debt, because you have to put unexpected costs on a credit card or get a loan. The compound effects of this, over a lifetime, can be financially crippling.</p> <p>Usually, it's possible to both save money and make payments on debt. Even if you just put a few dollars away each time you get paid, this will add up over time. It can also give you a psychological edge, just knowing that you are managing to save something.</p> <h2>4. I Don't Make Enough Money</h2> <p>When you are living paycheck to paycheck, it can feel impossible to start an emergency fund, simply because you don't have anything to put into it. For most of us, though, there is something (no matter how small) that we can cut out of our budgets so that we can start a fund.</p> <p>I know someone who took the &quot;latte challenge&quot; seriously. Instead of stopping for coffee every morning, she got a good coffee pot and then started putting that money into an emergency fund. And it really worked! In just a year, she had saved over $1000. When her car broke down, it was enough to make the needed repairs without leading her into more debt.</p> <p>The truth is that the less you make, the more you probably <em>need </em>an emergency fund, because you have less discretionary money available to cover unexpected costs. So start small, but do get started!</p> <h2>5. I Can't Save Enough</h2> <p>Even if you aren't living paycheck to paycheck, it can feel like you'll never have enough in your emergency fund. There is some controversy about how much money an emergency fund should have, but most sources say that it should contain three to six months' worth of living expenses.</p> <p>That's a lot of money. If you need $5,000 to cover your expenses each month, that's $15,000&ndash;$30,000. I don't know about you, but that's a daunting sum.</p> <p>Here's the thing, though. It's better to have <em>something </em>saved than nothing, even if you can't save as much as you'd like. Just because you can't put that much away right now doesn't mean you shouldn't get started. And even if you never get to your ideal emergency fund number, your savings can still help you when you need it.</p> <h2>6. But I Have a 401K</h2> <p>Some people consider their 401K to be their emergency fund. Sure, there are penalties for taking money out early, but at least it's there, right?</p> <p>There's some truth to this. If you absolutely need to, it's usually better to dip into retirement money rather than take on more debt. But a 401K actually makes an inefficient emergency fund. Even taking money out of a Roth IRA is a better route.</p> <p>401K funds are complicated because of taxes and fees.Taking a loan can also mean that you have to work for your current employer until you pay that money back, since you typically have to repay any outstanding balance on your 401K loan within 60 days when you separate from your company. Usually, your company will take a certain amount out of your paycheck until the loan is repaid. Keep in mind, this is in after-tax dollars; thus, you're taking home less money every pay period, which can create an even greater financial crisis. And even if you qualify for a <a href="http://www.401khelpcenter.com/401k_education/hardship_withdrawal_article.html">hardship loan</a>, you will have to pay the money back somehow.</p> <p>The penalties on taking money out of a 401K before you're 59 &frac12; can also be steep, so it's better to keep your emergency fund separate from your 401K. In fact, there's no good reason not to start your emergency fund today. Make your plans, then do what you need in order to set aside this money and keep it separate from the rest of your funds. When that rainy day comes, you'll be glad you did.</p> <p><em>How much do you think an emergency fund should have? Do you have that much saved right now?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/6-emergency-fund-myths-you-should-stop-believing">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-you-will-always-be-thankful-for">7 Money Moves You Will Always Be Thankful For</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/where-to-turn-for-help-when-you-dont-have-an-emergency-fund">Where to Turn for Help When You Don&#039;t Have an Emergency Fund</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-your-emergency-fund-big-enough-to-keep-you-afloat">Is Your Emergency Fund Big Enough to Keep You Afloat?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/using-your-roth-ira-as-an-emergency-fund-ever-a-good-idea">Using Your Roth IRA as an Emergency Fund — Ever a Good Idea?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-opportunity-funds-are-the-new-emergency-funds">Why &quot;Opportunity&quot; Funds Are the New Emergency Funds</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance emergency funds excuses myths savings Mon, 28 Dec 2015 14:00:03 +0000 Sarah Winfrey 1623781 at http://www.wisebread.com 5 Myths About Car Insurance http://www.wisebread.com/5-myths-about-car-insurance <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-myths-about-car-insurance" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/red-mustang.jpg" alt="Red car" title="Red car" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Picking out the right type of insurance can be complicated enough, so make sure you&rsquo;re not believing one of the many <a href="http://www.wisebread.com/auto-insurance">car insurance</a> myths when making your final decision. Here are five myths about car insurance, debunked. (See also: <a href="http://www.wisebread.com/6-mistakes-to-avoid-when-shopping-for-car-insurance">6 Mistakes to&nbsp;Avoid When Shopping for Car Insurance</a>)</p> <h3>1. Expensive Cars Command Higher Insurance Rates</h3> <p>While it&rsquo;s true that sports cars and luxury vehicles that have a higher risk of being broken into or stolen typically cost more to insure, the fact that these same cars are more expensive really has nothing to do with the insurance rates. Your insurance company will take your vehicle&rsquo;s loss history, how much it usually costs to repair your vehicle, and several other factors into account when calculating <a rel="nofollow" target="_blank" href="https://www.goinsurancerates.com/r/4e61285d87/?subid=809144">your insurance rate</a>. If you live in a high-crime neighborhood and drive your expensive car long distances on a daily basis, you can expect to pay a higher-than-average insurance rate.</p> <h3>2. Since I&rsquo;m a Female, My Insurance Rate Will Be Higher</h3> <p>Even though <a href="http://www.realclearscience.com/2011/07/09/women_more_likely_to_cause_traffic_accidents_241996.html">statistics show</a> that female drivers are more likely to get in a car accident than their male counterparts, insurance companies don&rsquo;t use this as a factor when determining insurance rates. What they <i>do</i> consider is the woman&rsquo;s driving history, the type of vehicle she&rsquo;s driving, and how much she drives &mdash; just like they do with their male customers. There is no difference in insurance rates based specifically on gender. You just need to make sure you have a clean driving history and are reporting your annual miles accurately to qualify for a better rate.</p> <h3>3. My Insurance Company Will Pay for Property Stolen From My Vehicle</h3> <p>Personal property, including cell phones, handbags, laptops, e-readers, and any other types of electronics are not covered under an auto insurance policy. In some cases, these items will be covered by your homeowners insurance policy, but you will need to file a separate claim. Remember to remove all pricey personal items from your vehicle and always <a href="http://www.wisebread.com/disguise-your-stuff-to-prevent-car-break-ins">keep them well out of sight</a> of any passersby. These can be a costly loss on your end and in some cases, can also compromise your identity.</p> <h3>4. I Already Paid for Insurance, So I Don&rsquo;t Need to Buy Another Policy for My New Car</h3> <p>You will always need to get an entirely new policy when you insure a different vehicle. Even if you own an insured vehicle but aren&rsquo;t planning on driving it, or you just paid for insurance on an old vehicle and decided to buy a different vehicle, your insurance company will need to run the numbers based on your new car&rsquo;s VIN and issue you a new policy. Your old policy can be canceled until you stop driving the car or authorize no coverage, or you can continue coverage until you sell the vehicle. Make sure you go over these details with your insurance agent and always inform them when you are making a <a href="http://www.wisebread.com/the-joy-of-buying-a-new-car-9-car-buying-tips">new car purchase</a>.</p> <h3>5. My Red Car Commands Higher-Than-Average Insurance Rates</h3> <p>This myth has been around for decades. Insurance companies don&rsquo;t take the color of the car into account when determining insurance rates but will take the make and model of the vehicle, how often you drive the car, and your driving history into account. The fact that your vehicle might be a red <i>sports</i> car instead of a red family sedan could have an impact on your insurance rate, because the sports car may be at a higher risk of being vandalized or stolen. So, if you want to get that red car you&rsquo;ve had your eye on all these years, go ahead and do it without worrying about a drastic increase in insurance. <a rel="nofollow" target="_blank" href="https://www.goinsurancerates.com/r/4e61285d87/?subid=809144">Your final insurance rate</a> will be determined by several other factors.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sabah-karimi">Sabah Karimi</a> of <a href="http://www.wisebread.com/5-myths-about-car-insurance">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/repair-the-car-or-spend-the-cash">Repair the Car or Spend the Cash?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-mistakes-to-avoid-when-shopping-for-car-insurance">6 Mistakes to Avoid When Shopping for Car Insurance</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-mechanical-breakdown-insurance-worth-it">Is Mechanical Breakdown Insurance Worth It?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-top-10-cheapest-cars-to-insure">The Top 10 Cheapest Cars to Insure</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-to-drop-collision-coverage-on-your-car">When to drop collision coverage on your car</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Cars and Transportation Insurance car insurance myths new car women Tue, 06 Dec 2011 11:00:21 +0000 Sabah Karimi 809144 at http://www.wisebread.com Debunking Common Estate Planning Myths http://www.wisebread.com/debunking-common-estate-planning-myths <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/debunking-common-estate-planning-myths" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/Will.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="188" /></a> </div> </div> </div> <p>Given the tens of millions of Americans nearing the Golden Years, the fields of retirement and estate planning are expanding by leaps and bounds. Along with the growth of work for financial advisors and estate planning attorneys, has come the advent of self-planning. From managing your entire investment portfolio from your home computer, to preparing your own Wills, Trusts and advanced-directives using an online document-preparation service, the &quot;do-it-yourself&quot; sector of financial and estate planning is enjoying huge growth. </p> <p> As more and more Americans rely on websites like LegalZoom to help them prepare pre- and post-mortem documents, it is important to understand the several &quot;myths&quot; of estate planning, and how these online sites fail to convey the risks involved with self-prepared documents.</p> <p><strong>Myth #1: You Need a Will</strong><br />This is an absolute lie, perpetrated by online companies and sometimes unethical attorneys looking to generate business. Don&#39;t get me wrong, most people could benefit from a Will, but not everyone needs a Will. If you have minor children, you will want to prepare a basic Will as soon as possible to ensure guardianship of your children passes to a trusted family member or friend in the event of your premature demise. However, if you have no minor children, there are other ways to assure the meaningful disposition of your assets when you pass other then a Will.</p> <p>For example, let&#39;s say Robert Jones is a widower with two adult children. Robert owns his personal residence that he&#39;s lived in for several years, has a life insurance policy, a small bank account and a rather large IRA account that pays him income on a quarterly basis. Robert also has a pension and receives income from Social Security. My advice here is that, in the absence of extreme family matters, i.e. his children are divorced, he is expecting to inherit a large sum of money from a relative, etc., there is no pressing need for Robert to have a Will. The personal residence can be re-titled (in most states) to give Robert a Life-Estate and pass the home to his two children when he passes away (outside of probate). Also, Robert&#39;s life insurance, bank and IRA accounts can all pass to his children by either naming them as Beneficiaries (in terms of the insurance and IRA) and also making the bank account payable to his children on death. Now, if we were to mix in several equity accounts, multiple pieces of real estate and different gifting ideas, Robert&#39;s planning becomes more complicated. But, for now, you can see that the idea that everyone needs a Will is simply misleading. </p> <p><strong>Myth</strong> <strong>#2: A Trust Automatically Avoids Probate</strong><br />Trust planning is becoming more and more popular in the U.S., mainly because it is a creative way to meaningfully pass along large assets to your descendants while hopefully avoiding a probate proceeding. Without getting into too detailed a discussion about the different kinds of trusts available (they vary by state) it&#39;s important to note that having trust will not automatically avoid a probate proceeding when you pass. The first step after you execute your trust is to re-title your assets that you wish the trust, vis-a-vis the trustee to manage. If you pass away without re-titling all of your trust assets, then those assets which remain outside the trust will be subject to disposition according to your Will, and a probate proceeding will be likely. </p> <p><strong>Myth #3: Everyone Needs A Trust</strong><br />This is nothing more than a ploy for business. Playing on the example from Myth #1, Robert Jones does not need trust-planning at all. While it is true Robert could have some type of trust to ensure the proceeds from his IRA account are managed/distributed according to his wishes, the truth is most of Robert&#39;s assets will pass to his descendants by operation of his beneficiary designations. Trust planning is advantageous in several situations, including second marriages, families who wish to provide for adult/minor children, including a child with a disability, high net worth individuals and those who hold certain types of assets, i.e. large investment funds, several pieces of real estate, etc. However, for most Americans trust planning will do little beyond cost you a chunk of money annually (trustees are entitled to annual commissions for managing your property in most states) and create more of a paperwork shuffle in managing and distributing your assets. </p> <p><strong>Myth #4: Giving Away My Money Is The Only Way I&#39;ll Qualify for Medicaid</strong><br />Many online sites and attorneys advise elderly clients to actively give away their money in order to lower the available resources and qualify for Medicaid (to defer the cost of nursing care or placement in an assisted-living facility). The truth is, most baby-boomers are very independent when it comes to managing their finances, so while this type of strategy may have worked in the 1980s and 90s with the Depression-era babies, it will serve little utility as the baby boomers reach retirement age. There are several different ways to qualify for Medicaid without giving up total control to your money, and if anyone tells you otherwise they are flat-out lying. However, based on new federal regulations placed into effect almost two years ago, Medicaid will now require you to provide financial history account statements for five years prior to your Medicaid application. The lesson for those who feel they may need nursing-care and placement within the next decade, purchase long-term care insurance, and start keeping accurate details and records of your finances. </p> <p><strong>Myth #5: I Should Name My Estate As Beneficiary of My IRA/Life Insurance</strong><br />Don&#39;t do this. I cannot think of any benefit here, especially because estates generally pay higher taxes than individuals, this type of planning will have serious tax consequences for your estate. The reality is a lot of people name their estate (i.e. Estate of Robert Jones) as the primary beneficiary of their IRA/life insurance/annuities, etc. This is bad for tax-planning purposes, and also because now those assets are forced to pass through your estate (rather then directly to your intendend beneficiaries) and will be subject to probate. This is a bad idea all around. </p> <p>I hope you enjoyed my first post, and will look forward to many more posts which intersect the areas of personal finance, taxes and estate planning. </p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/anthony-marrone">Anthony Marrone</a> of <a href="http://www.wisebread.com/debunking-common-estate-planning-myths">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/wills-the-basics">Wills: The Basics</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-set-up-a-trust-for-your-child">Should You Set Up a Trust for Your Child?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-financial-moves-to-make-when-a-loved-one-dies">12 Financial Moves to Make When a Loved One Dies</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/estate-planning-why-me">Estate Planning: Why Me?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-time-to-talk-with-your-parents">Is it Time to Talk with your Parents?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance estate planning myths trusts wills Sat, 19 Jan 2008 18:51:58 +0000 Anthony Marrone 1650 at http://www.wisebread.com