Comments on: The 11 Principles Series: Do Not Believe In Money Myths http://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/ Personal Finance Blog, Your Guide to Financial Fitness Thu, 09 Feb 2012 21:28:00 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: suziehttp://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4957 suzie Sun, 08 Jul 2007 03:49:15 +0000 http://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4957 I liked what you said about people boasting their credit score. Although it is silly to be judged on it - we unfortunetly are. I liked what you said about people boasting their credit score. Although it is silly to be judged on it – we unfortunetly are.

]]> By: Erikhttp://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4947 Erik Wed, 04 Jul 2007 13:37:22 +0000 http://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4947 To be conservative, I would say net income. Basically, if your take home pay is $4,000. I would try to keep your mortgage payment no more than $1250 a month. You could probably get away with $1300 or 1400, but you wouldn't have much left over to save at the end of the month. To be conservative, I would say net income. Basically, if your take home pay is $4,000. I would try to keep your mortgage payment no more than $1250 a month. You could probably get away with $1300 or 1400, but you wouldn’t have much left over to save at the end of the month.

]]> By: Lonniehttp://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4940 Lonnie Sat, 23 Jun 2007 04:04:40 +0000 http://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4940 Regarding Myth #3 above. When you say 25 to 30% of household income, is this gross or net income? Regarding Myth #3 above. When you say 25 to 30% of household income, is this gross or net income?

]]> By: Stevehttp://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4938 Steve Thu, 21 Jun 2007 18:59:33 +0000 http://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4938 Hi! I just came across your blog via a link from consumerist. I really enjoy what I've read so far. A lot of what you say about debt, especially in regards to how our culture views debt, is right on the money. What most people, especially Christians, don't realize is how much the bible has to say about money, debt, greed, possesions, etc. Deut. talks about how debt is a curse. Proverbs 22:7 says "Just as the rich rule the poor, so the borrower is servant to the lender" . I've bookmarked your page, and look forward to the rest of the 11 Principles Series! Hi!

I just came across your blog via a link from consumerist. I really enjoy what I’ve read so far.

A lot of what you say about debt, especially in regards to how our culture views debt, is right on the money.

What most people, especially Christians, don’t realize is how much the bible has to say about money, debt, greed, possesions, etc.

Deut. talks about how debt is a curse. Proverbs 22:7 says “Just as the rich rule the poor, so the borrower is servant to the lender” .

I’ve bookmarked your page, and look forward to the rest of the 11 Principles Series!

]]> By: CThttp://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4936 CT Thu, 21 Jun 2007 11:40:43 +0000 http://www.moneycrashers.com/the-11-principles-series-do-not-believe-in-money-myths/#comment-4936 I think you are a little too hard on debt here. These aren't really myths, more like "dangers". Here are my comments on each one: 1. Debt really can be a tool if you use it correctly. Student loans are a great way to pay for college, and without mortgages many people would never be able to afford their first home. Also, there are plenty of people who have become millionaires with the help of debt. The most common example is debt to start a business. Almost all businesses lose money for the first few years, and often the owners use debt to keep the business going. Debt is a very important tool for businesses in general, and the bond market would not exist without it. 2. I agree with this. Consolidation is only a tool to make it easier to get out of debt. 3. I agree with your main point here, don't buy too big of a house than you can afford. If you can't afford any kind of house, don't buy one. Too many people focus on their monthly payment (especially in ARMs). With that said, building equity in a house is important, so if you don't already own a house you should at least be saving for a downpayment on one. 4. This one isn't a myth, its a fact. If you want a good credit score, you need to have a long record of past payments, which means you need to have carried debt over that period. This doesn't necessarily mean that you have to pay interest, you can have a credit card and pay off the balance every month. There are some times when it makes sense to keep an account open just to help your score. Keeping a credit card account open helps keep your debt utilization low by keeping your credit limit high. Keeping a student loan debt can sometimes actually make you money, because CD and money market rates are often higher than student loan interest rates. Credit agencies are not stupid, it is their job to figure out who is going to pay them and who isn't. They look at past payments closely because that is the best way for them to predict if you will pay them in the future. Having a low credit score will cost you money if you need to carry debt. Unless you can afford to buy your next home with cash, you will want your mortgage interest to be as low as possible, which means having a good score. I think you are a little too hard on debt here. These aren’t really myths, more like “dangers”. Here are my comments on each one:

1. Debt really can be a tool if you use it correctly. Student loans are a great way to pay for college, and without mortgages many people would never be able to afford their first home. Also, there are plenty of people who have become millionaires with the help of debt. The most common example is debt to start a business. Almost all businesses lose money for the first few years, and often the owners use debt to keep the business going. Debt is a very important tool for businesses in general, and the bond market would not exist without it.

2. I agree with this. Consolidation is only a tool to make it easier to get out of debt.

3. I agree with your main point here, don’t buy too big of a house than you can afford. If you can’t afford any kind of house, don’t buy one. Too many people focus on their monthly payment (especially in ARMs). With that said, building equity in a house is important, so if you don’t already own a house you should at least be saving for a downpayment on one.

4. This one isn’t a myth, its a fact. If you want a good credit score, you need to have a long record of past payments, which means you need to have carried debt over that period. This doesn’t necessarily mean that you have to pay interest, you can have a credit card and pay off the balance every month.
There are some times when it makes sense to keep an account open just to help your score. Keeping a credit card account open helps keep your debt utilization low by keeping your credit limit high. Keeping a student loan debt can sometimes actually make you money, because CD and money market rates are often higher than student loan interest rates.
Credit agencies are not stupid, it is their job to figure out who is going to pay them and who isn’t. They look at past payments closely because that is the best way for them to predict if you will pay them in the future. Having a low credit score will cost you money if you need to carry debt. Unless you can afford to buy your next home with cash, you will want your mortgage interest to be as low as possible, which means having a good score.

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