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7 money myths that can mess up your life

January 17, 2011 12:00:00 AM PST
As we continue to recover from one of the biggest financial crises in decades, Mary Hunt of Debt Proof Living says consumers are still holding onto popular financial myths that could be costly. And this author of several books on money matters says it's time to replace those myths with a dose of reality.Myth #1: If I just had more money, all my problems would go away.

"The truth is more money will never be enough until you learn how to manage what you already have," said Hunt.

Myth #2: I can have it all. I work hard, make a decent living and I deserve to have nice things.

Hunt says while most people can't have it all, they can have enough. Even if you can afford to buy the latest high-tech gadgets and a bigger home, doesn't mean you should. Downsizing to a smaller home and living a less extravagant lifestyle isn't a bad idea.

"It doesn't mean that you're committed to poverty for the rest of your life, but as long as you keep thinking that I can have a perfect life and as soon as I get enough money, it's going to happen. It's not, that's a myth," said Hunt.

Myth #3: Buying things on sale is a great way to save money.

"Buying things on sale is not a great way to save money. It's a great way to spend less money," said Hunt. "Unless you stop at the bank on the way home and deposit the difference between what you would have spent and what you did, you haven't saved anything."

Buying on credit is a part of life for many of us, whether it's purchasing a new car or a new set of clothes.

Myth #4: Buying things on credit is a smart financial strategy because you are using someone else's money.

"In your personal life, using other people's money is a great way to get into debt and that is a death sentence," said Hunt.

Myth #5: These days it takes two incomes to keep up financially.

While many families do need two incomes to pay the bills, Hunt says having two incomes in the family can lead to higher expenses, including having to pay for child-care, house cleaning, extra insurance, gas and parking.

"If you can see your way clear for one person to stay home and start doing all of those things you're paying other people to do, I really do believe that most people would be better off," said Hunt.

Myth #6: If things get too bad, I can always file for bankruptcy and get a fresh start.

But Hunt says bankruptcy and litigation could haunt you for years.

"Bankruptcy is a very difficult thing to live with. It's not a fresh start, it's a 10-year black eye," she said.

Myth #7: I am a loser and a failure because I am in such terrible financial trouble. My situation is completely hopeless.

"I've never seen a situation that's completely hopeless. I've seen some very difficult situations and sometimes we have to choose the best of the worst options, but no one is a loser," said Hunt.

If you're in debt, there are a number of resources to help you climb out of it, including calculators to figure out a debt repayment plan.