In Part 1 of my review of The Total Money Makeover, the bestseller on becoming debt free by Dave Ramsey, I discussed debt myths that we as Americans have come to believe. Now in Part 2, I will discuss 4 of the money myths Dave lists in his book, and explain why Dave thinks that they are myths that will not help us reach Financial Freedom. I will also explain what Dave tells us to do to change the way we think about money.
Throughout history, people have been on a quest for “easy money.” It’s on of the oldest myths that we human cherish. We look for the shortcut, the easy way, to wealth. That’s how criminals came to be; they wanted to gain wealthy by grabbing it from someone else.
People also don’t want to prepare. It’s easier to let the future take care if itself. People don’t want to confront the possibilities that their future may hold and prepare for them, like retirement. This problem is called Denial.
What are the secrets of the rich? Well, according to Dave Ramsey, there aren’t any. The principles the wealthy followed to become wealthy aren’t secret, or magic. Becoming wealthy isn’t complicated. It may be difficult, but it isn’t complicated.
So, here are some money myths that people think will bring them easy money or keep them in denial.
I’m not saving for retirement, because I can’t afford it now, but things will work out okay eventually.
Nobody is coming to your rescue when you get old and either retire or are forced out of your job. Do you think that the government is going to bail you out? Do you think that living on Social Security is a glorious plan and you will be able to travel the world? What do you do if even the meager Social Security payments are gone because the government can’t afford the payments?
Unless you’re looking forward to Ramen noodles for life, or a second career in food service, you need to get off your duff and start NOW saving some of your income for your retirement years. If your work doesn’t have a plan, get into one of your own. You CAN’T postpone this!
Gold is a great investment for the future. It will protect me if the economy collapses.
You’d better take a look at gold’s track record. Before 2001, it wasn’t that good. Since 2001 it’s been better because of the worry after the 9/11 disaster, and the recession a few years ago, but in the long run gold has a history of about a 2.2% yield per year. Not much better than stuffing money in your mattress.
And what about if the economy collapses? Will gold be a valuable commodity then? What I like to keep in mind is that, if the economy does fail, can you eat your gold? What people do in apocalyptic situations like a collapse is to revert to a barter system because the monetary system is gone. Is gold a good barter item? Would you trade your last few cans of food for someone’s bright, shiny gold?
Nothing is good for barter if it’s not considered valuable NOW. What WILL BE considered as valuable is food storage, or a skill you can use and trade for what you want, or even gasoline. Maybe even blue jeans. I’d bet that a 5-gallon can of gas would cost a lot of gold coins in a bad situation.
Get-Rich-Quick Schemes will make you money fast! These schemes, advertised on TV and on the internet, attract thousands, if not millions of people all the time. You can find them on late night (early morning) TV) a lot. I’ve seen ads online where they tell you that you can make your first $500 within 30 minutes after joining their program. They even have people giving testimonials to their success.
Then there are programs where you can buy real estate, no money down, or with other people’s money, and get rich re-selling the properties. The truth with real estate is that it’s market driven, and it’s very hard to buy low enough to re-sell for a profit quickly. You will usually have to wait for the market to improve.
People are attracted to these scams, and they are scams, all the time because they believe in the get-rich-quick myth, and therefore they are preyed upon by people hoping to take their money.
The laws of finance are like the laws of physics. You can’t jump over, go around, or under them to get to the other side. You have to follow the rules of finance and investment. Don’t believe the hype put out by the scams. You will be disappointed.
I don’t need retirement planning or a savings plan. Playing the lottery will make me rich eventually. The odds get better the longer I play.
Have you ever been in the line to buy lottery tickets when the jackpot starts rising above $100,000,000 dollars? You’d think you were in line to get tickets to the hottest band on the planet. What kind of people think that they will become rich from playing the lottery?
People’s excuse is, even though the odds are horrible, SOMEONE has to win, so why not me? I’ve heard that the odds of getting struck by lightening are better than the odds of winning the lottery. What kind of people stand in line and buy lottery tickets, or scratch tickets? It’s the people who drive beat-up old cars, and are wearing worn clothes. If the lottery were a REAL wealth-building tool, don’t you think that rich people would be standing in line with everybody else?
I’ve heard of people buying thousands of dollars worth of tickets when the jackpot gets high, thinking that it’s worth the cost if they win. I’ve heard of someone putting a mortgage on their home to buy lottery tickets. The sad fact is that those people are just digging their holes deeper.
And what’s pathetic to me are the people who buy scratch tickets or lottery tickets to give as gifts to loved ones. I know I shouldn’t judge, but what does such a gift say about the giver? Here’s something that only cost me $2 and is probably worth less to you, but hey, you might win!
Studies have shown that the zip codes that spend up to 4 times more than what other places spend on lottery tickets are located in poor or lower income areas. It’s a false hope, not a path to wealth.
Discover The Path To Financial Freedom.
Dave Ramsey has been helping people become debt free for quite a few years now. If you are interested in his training and his methods for getting out of debt, like the debt snowball, visit his site and take a look around. Here’s the link.
Thanks for reading my post. Please leave me a comment if you’d like.