In this world there are many different types of people there are people with a
lot of education and those with little there are people that are rich and there
are others that are poor there are those of us who think money is good and those
who think money is evil in short we all live lives that are unique to us however
one thing that seems to be common amongst most people is their
understanding of money most people lack an understanding of how money really
works which is holding back your ability to succeed financially therefore in this
video I will share with you five money myths you still believe and if you're
new to the channel then hit the subscribe button below for more
life-changing content myth number one the more education the
better if you want to succeed in today's world you must go to college and get a
great education this is advice that has been passed down from parent to child
for countless decades because this path is becoming great in our society many
people continue to go down this road however with more and more people
getting degrees the value of the certificate is declined in its value
it's for this reason that people are now pursuing more education to separate
themselves from the pack in the business world we live in today
it may take that advanced degree or extra certificate to help you stand out
from other applicants when trying to get that job you've been pursuing now in
many cases getting more education is a smart decision you can't become a doctor
or lawyer without an extensive education for pursuing numerous degrees doesn't
always make financial sense student loan debt is now the second highest form of
debt in the United States after mortgage debt it is surpassed both auto loan debt
and credit card debt with over one point five two trillion dollars owed in 2018
according to Forbes that comes to an average of 37 thousand one hundred and
seventy two dollars per graduating student quite frankly it's a financial
epidemic before getting into any student debt at all I think it's smart for
students to take the time they need to truly deliberate on what career they
want to pursue this could come in the form of job shadowing or taking a gap
year before enrolling in college before throwing down thousands of dollars you
should have a very good idea of what field you want to pursue and specific
jobs you could see yourself working in a graduation of course once you have this
nailed down you need to know how you will finance your tuition and sadly this
is no small feat in a perfect world you could work during the summer and have
enough money to cover you tuition and living costs but sadly with today's
inflated education costs this simply isn't feasible in fact in my opinion
college has become outrageously expensive the average cost of one year's
tuition fees at a private college for the 2018 to 2019 school year is thirty
five thousand six hundred and seventy-six dollars even if that cost
stays frozen for the next four years which won't that would come up to one
hundred and forty two thousand seven hundred and four dollars over four years
there's no way that a young adult working at a student wage can save that
amount of money to fund their tuition this is why you must be analytical when
considering taking on a new degree well a college degree is useful across many
fields masters and other advanced degrees are generally not before you
make any decision on getting more education I think it's wise to do a
cost-benefit analysis identify the total cost of the program you want to take and
then the increase in income this degree will give you for instance my CPA
designation cost me roughly twenty five thousand dollars but it is allow me to
make at least that much more per year than if I would have only had pursued
about degree therefore while education is good more may not always be better
myth number two you should pay off your student loans before buying a home if
you listen to Dave Ramsey then you will know that he is a big advocate of
debt-free living and while I do believe that you should avoid most forms of debt
the reality is that many Americans do have some debt baggage they are carrying
but should you let this debt stop you from buying a house the answer to this
question isn't that simple total student loan debt has doubled over the last
decade while home ownership rates among young adults have plummeted in 2004 the
homeownership rate for adults under 35 sat at forty three point six percent
that fell to thirty four point three percent by 2017 with so much student
loan debt it can be difficult for young adults to qualify for a mortgage in
addition to skewing dead to income ratios student loans impact borrowers
credit scores but it's not just financial factors that play a role in
the decision of whether now you should buy a home you must also
assess if you are ready to take on the responsibilities that come with owning a
home like its upkeep and being tied down to one location this is why some people
opt to rent versus own but if you're someone that's strongly opposed to
paying down someone else's mortgage when you could be paying down your own that
even if you have student debt you should be running the numbers to determine
whether or not you can afford to buy getting into the market earlier also
means that you can benefit from the ever-increasing rise in property values
that is often a primary consideration when deciding whether or not you should
put off paying your student loan in fact overall homeownership has many positive
benefits when it comes to your finances over time home ownership can not only
save you money on your monthly housing payment but it can also help you build
wealth look no further than a 2018 Harvard study that found that
middle-aged homeowners have an average net worth 60 times higher than
middle-aged renters therefore in many cases it makes more sense to put money
towards a down payment rather than paying off existing debts miss number 3
buying is always better than renting like I just mentioned there are numerous
benefits of owning a home but as you know nothing is perfect which is why
renting is also another viable option when it comes to managing your housing
situation you see when you buy a home there are a ton of upfront costs like
home inspections property taxes and closing costs these are unrecoverable
costs that you unfortunately will never get back now over time homeowners
typically save money compared to renters in the form of lower payments home
appreciation and gradually shrinking mortgage balances but the process takes
years and how many years it takes depends on factors such as local market
home values rents interest rates and repair costs that means that
homeownership usually makes sense only for people who plan to stay in one home
for at least a few years furthermore homeownership sometimes involves
unexpected costs the roof needs to be replaced
or the furnace or the wiring you wake up to a normal day and by lunch time you
have a $5,000 bill you need to pay immediately be on location stability and
staying put for a while homeowners also need financial stability they need a
much larger emergency fund than the average renter to cover sudden and
unexpected home related costs nowadays more and more people are choosing to
rent versus buy and I think this decision comes down to a few main
factors the first is the convenience at renting offers if anything breaks you
simply call up your landlord and they fix it
second many people simply cannot accumulate enough money for a down
payment on a home so in this case they are basically forced to rent finally
people are becoming much more transient in their lifestyles and renting allows
them to travel more or move to new opportunities and not be tied down to
the chore and cost of selling their home out of a larger scale the assumption
that buying is better doesn't always apply in most cases it makes far more
sense to rent high-end items that you only plan to use once or twice such as a
wedding dress or high-end jewelry if you want to swap out your car every two
years it often makes more sense to lease than by renting and sometimes better
than buying and anyone who tells you otherwise is selling something myth
number four your home is an investment probably the most misunderstood myth
that the majority of people still believe is that a home is an investment
Osmos homeowners and they will tell you that their home is their number one
asset and sadly they are totally missing the mark but let me tell you why first
an asset is defined as a resource resulting from a past event from which
future economic benefits are expected to flow for the majority of people there is
no flow of economic benefit their home earns them zero income in fact homes do
quite the opposite and continuously cost you money have to redo your roof there's
$10,000 how to install new windows there's another $15,000 because your
home will cost you money over time it is better to see your home as a liability
if you're unfamiliar with this financial term a liability is defined as a present
obligation arising from past events that is expected to result in an outflow of
economic benefits therefore when you buy the home you will have a past event and
every repair and renovation you do is an economic outflow meaning that by
definition a home is a liability a situation where home could be an asset
is if it's a rental property with the rental property you buy it and over time
it generates cash flow to rental payments now many homeowners will argue
that over time their home will appreciate and they are right in saying
this however this is just value on paper and can only be realized when selling
the home unfortunately many homeowners will
invest thousands of dollars into their property to try and maximize the return
upon sale but studies showed that this often isn't worthwhile consider
remodeling magazines 2019 report on the average return on investment for common
home improvements they measure ROI as a percentage of a renovations cost that's
recovered to a higher home sale price in the 2019 report exactly zero home
improvements delivered a positive ROI and every single renovation cost more
than it returned in higher values therefore it is much more lucrative to
save that money you would spend on a new door kitchen and instead put that money
to proven investments like stocks or rental properties so that you can
realize a return you aim to achieve myth number five you must put 20% down on a
home one of the longest standing myths around home ownership is that you must
put down 20% now of course you could put a less down but then you would be
subject to PMI or private mortgage insurance which will come as an extra
cost when buying your home well it is beneficial to avoid this cost well you
should really be asking yourself is if it's worth paying this expense in order
to free up your money for other uses for instance if PMI in your local market is
3% and you can use that extra capital to invest in the market at 7% then it makes
financial sense to put down a smaller down payment and invest the rest
secondly not everyone has the cash on hand to put 20% down on a home for
instance in my market the average home was $500,000 if you wanted to follow
this rule of thumb then you would need to put down $100,000 the reality is that
saving up a hundred thousand dollars for many people will take years and every
year you put off getting into the market housing prices increase this rise in
prices means you will need more money to put down 20% therefore if you cannot
secure a return on your money at a greater rate than what PMI would cost or
if you have the cash on hand to put down 20% then that's great but for 99% of
people following this money myth isn't the best pot to take thanks for watching
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