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Six Basic Personal Finance Facts People Constantly Get Wrong

MULTIZ321

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Six Basic Finance Facts People Constantly Get Wrong - by Trent Hamm/ Personal Finance/ Lifehacker/ lifehacker.com

"Quite often, the “facts” that people tout when it comes to personal finance aren’t quite facts at all. Sometimes they’re just opinions stated with authority, or they’re based on incorrect information or assumptions. Is it any wonder there’s so much confusion when many finance principles are counter-intuitive?..."

kalnzwvvtc2auisxstks.jpg




Richard
 

Big Matt

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I guarantee that most people get these wrong. Folks on these boards are pretty well educated and up on things or else we wouldn't all be here trying to game the timeshare system.

Most people don't save any money other than via social security or savings. Thus they won't have a 401k or any other investments. That takes numbers 2 and 3 out of the mix.

Number 5 is completely elusive to almost everyone, even smart people who should know better.

On number 4, almost nobody looks at buying a house at these terms. People either rent or buy based on other things like wanting to have something they own (even though the bank generally owns the house for a very long time) or wanting to be able to be mobile.

Number 6 seems to occur regardless of how much you make if you are unhappy to begin with, the size of what you want just goes up the more money you have.

Number 1 isn't even worth a discussion. Unless you do your own taxes by hand the software or your accountant figures out the answer.
 

VacationForever

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My favorite one is not on this list and it comes from 2 different CPAs:

- Social Security payment is based on SS tax of your highest earning year. So you only need to hit the maximum on 1 year then you get the maximum amount.
- Social Security payment is computed based on the highest earning 5 years. So you only need to earn to the limit for 5 years and you will get the maximum payout.

Unfortunately the first one comes from my current CPA and the second is a good friend owns a CPA firm. They both urged that I stop working now as I will be getting the maximum payout from social security regardless. DUH!
 

isisdave

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sptung, I hope you are kidding, and if not you sure need a new CPA. In fact, I'd report that one to the licensing board in your state. That's dangerous advice!
 

artringwald

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My favorite is #6.

6) If You’re Unhappy, Having That Thing You Want Most Won’t Make You Happy

I've know many unhappy people that think buying the latest _______ (fill in the blank) will give them joy. If it does, it always seems to be short lived and hollow. The author also has some wise advice:

First, how you spend your time has a lot more to do with your happiness than what things you own.

Second, whether or not you choose to be happy is also a vital factor in your own happiness.
 

Jason245

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My favorite one is not on this list and it comes from 2 different CPAs:

- Social Security payment is based on SS tax of your highest earning year. So you only need to hit the maximum on 1 year then you get the maximum amount.
- Social Security payment is computed based on the highest earning 5 years. So you only need to earn to the limit for 5 years and you will get the maximum payout.

Unfortunately the first one comes from my current CPA and the second is a good friend owns a CPA firm. They both urged that I stop working now as I will be getting the maximum payout from social security regardless. DUH!


I hope the rate you are paying is low..because the quality sounds like it is.

Sent from my SAMSUNG-SM-N910A using Tapatalk
 

Jason245

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Six Basic Finance Facts People Constantly Get Wrong - by Trent Hamm/ Personal Finance/ Lifehacker/ lifehacker.com

"Quite often, the “facts” that people tout when it comes to personal finance aren’t quite facts at all. Sometimes they’re just opinions stated with authority, or they’re based on incorrect information or assumptions. Is it any wonder there’s so much confusion when many finance principles are counter-intuitive?..."

kalnzwvvtc2auisxstks.jpg




Richard
This is all comon sense...people really get this wrong?

Sent from my SAMSUNG-SM-N910A using Tapatalk
 

John Cummings

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I guarantee that most people get these wrong. Folks on these boards are pretty well educated and up on things or else we wouldn't all be here trying to game the timeshare system.

Most people don't save any money other than via social security or savings. Thus they won't have a 401k or any other investments. That takes numbers 2 and 3 out of the mix.

Number 5 is completely elusive to almost everyone, even smart people who should know better.

On number 4, almost nobody looks at buying a house at these terms. People either rent or buy based on other things like wanting to have something they own (even though the bank generally owns the house for a very long time) or wanting to be able to be mobile.

Number 6 seems to occur regardless of how much you make if you are unhappy to begin with, the size of what you want just goes up the more money you have.

Number 1 isn't even worth a discussion. Unless you do your own taxes by hand the software or your accountant figures out the answer.

I disagree.

Everybody I know has a 401k or had one if they are retired. Number 5 is just common sense as are the others.

I know that there are some people that get these things wrong but to say that people constantly do is a gross exaggeration.
 

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I disagree.

Everybody I know has a 401k or had one if they are retired. Number 5 is just common sense as are the others.

I know that there are some people that get these things wrong but to say that people constantly do is a gross exaggeration.

And throwing a guarantee on top of it furthers the drama. Makes me wanna say Prove It, but that's equally ridiculous...
 

Talent312

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I've know many unhappy people that think buying the latest _______ (fill in the blank) will give them joy. If it does, it always seems to be short lived and hollow.

But sometimes, buying new toys bring years of contentment... Like a new power tools, the 60" over my fireplace, my remodeled master bath, a new computer and computer desk.
.
 

artringwald

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But sometimes, buying new toys bring years of contentment... Like a new power tools, the 60" over my fireplace, my remodeled master bath, a new computer and computer desk.
.

Were you an unhappy person before you bought them, or were you a happy person that is happier now?
 

WinniWoman

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But sometimes, buying new toys bring years of contentment... Like a new power tools, the 60" over my fireplace, my remodeled master bath, a new computer and computer desk.
.

I agree with this to an extent- if certain things can improve your lifestyle, they can make you happier.

But certainly, if you tend to not be a happy person overall, nothing will make you happy in the long run.
 

Talent312

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Were you an unhappy person before you bought them, or were you a happy person that is happier now?

I wouldn't describe myself as an unhappy or happy person.
Sure, stocking up on the latest-greatest gadgets is foolish.
But having "nice things" brings me a small measure of happiness.

I enjoy a middle-class, bourgeois existence, more than I would not.
.
 

geekette

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I think the point was more about the people that latch onto the idea that "everything will be perfect when ...." x happens. Only maybe x doesn't ever happen or maybe x happens and they still aren't happy. For me the point is to live in the now and find your happiness in the areas you can control.

I had a friend in college that planned her life down to the year she would have her first child and what its name should be, and then she could be happy. But she graduated late, throwing the timeline off, and she didn't meet nor marry her husband on her original timeline. And guess what, papa wanted a say in what the name of the kid would be. She figured out that planting a flag on some future thing or occurrence and delaying your own happiness until then is foolish. Once she began living in the present, enjoying her life in the here and now, the angst about climbing the hill to happiness vanished.
 

LannyPC

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I thought point number 4 was interesting:

4) Renting Isn’t Just Throwing Money Away and Buying a House Won’t Make You Rich Due to ‘Equity’

Seeing that this is a Timeshare forum, this point is so applicable to TSs. It's kind of funny how TS sales people try to spin this. One of their main selling points is that if you rent (be it a hotel room, TS, or vacation home), all you end up with is worthless receipts. Whereas you could own your own vacation property and have equity and an asset, yadda, yadda, yadda.

This seems also to be the case in the area where we live. When many condos, high-rises, townhouse complexes, etc. are getting ready to break ground to be built, they advertise with a tag line along the lines of "Stop paying your landlord's mortgage."
 

geekette

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This seems also to be the case in the area where we live. When many condos, high-rises, townhouse complexes, etc. are getting ready to break ground to be built, they advertise with a tag line along the lines of "Stop paying your landlord's mortgage."

"And start paying ours"
 

SMHarman

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I thought point number 4 was interesting:

4) Renting Isn’t Just Throwing Money Away and Buying a House Won’t Make You Rich Due to ‘Equity’

Seeing that this is a Timeshare forum, this point is so applicable to TSs. It's kind of funny how TS sales people try to spin this. One of their main selling points is that if you rent (be it a hotel room, TS, or vacation home), all you end up with is worthless receipts. Whereas you could own your own vacation property and have equity and an asset, yadda, yadda, yadda.

This seems also to be the case in the area where we live. When many condos, high-rises, townhouse complexes, etc. are getting ready to break ground to be built, they advertise with a tag line along the lines of "Stop paying your landlord's mortgage."
Especially with the transaction costs on property in the US. It's easily over 10% of the value.

So the first 10% of the equity goes to someone else.
 
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