Money myths and the importance of thinking for yourself

When I sat down to write Your Money: The Missing Manual, I knew I wanted to start with a chapter on happiness. (Well, to be fair, I was going to conclude the book with this chapter; my editor suggested moving it to the beginning, which was a stroke of genius.) In particular, I wanted to make the point that money doesn't buy happiness. Because we all know that's true, right?

Well, not so much, as it turns out.

Can Money Buy Happiness?

As I wrote the chapter, I found that I had trouble locating data to support my hypothesis. There were plenty of people (including me) who loudly proclaimed that money and happiness were unrelated, and their arguments were persuasive, but none of these folks ever offered numbers to support their case.

In fact, the more I read, the more I realized they were wrong. And so was I. The numbers actually show the opposite. Money does buy happiness; researchers have found a strong correlation between increased wealth and increased contentment. In their book Happiness, Ed Diener and Robert-Biswas Diener write: “Rich people and nations are happier than their poor counterparts; don't let anyone tell you differently.”

But the authors don't just make the claim — Diener and his son had the numbers to back up their position. Though it's a widely-held belief, it's a myth that happiness and money are unrelated.

Sometimes, as in the case of this money/happiness stuff, money myths are just plain wrong. Other times they sprout from a grain of truth.

Note: Here's the thing: Though the correlation between money and happiness is strong, except for when it comes to boosting people from poverty, increased wealth has only a small impact on well-being. To put it another way, more money will make you happier, but unless you're poor, it won't make you much happier.

Do People Spend More When Using Credit?

Financial guru Dave Ramsey often cites a Dun and Bradstreet study that purportedly reveals people spend more with credit than with cash. I'd always accepted his claim as true, and hadn't bothered to double-check it. But when I was researching the credit chapter for my book, I had to do more than just take things on faith. I had to find actual sources.

Nobody I know has been able to track down this mythical Dun and Bradstreet study. Even Dun and Bradstreet themselves have been unable to locate it. GRS reader Nicole (with the assistance of her trusty librarian Wendi) contacted the company and received this response: “After doing some research with D&B, it turns out that someone made up the statement, and also made up the part where D&B actually said that.”

In other words, the study doesn't exist.

So why do Dave Ramsey and a host of others cite it? Who knows? It's tough to trace the origin of urban legends, but that didn't stopped Nicole and Wendi from digging further. They kept searching for the source of the D&B myth. Eventually, they succeeded.

Turns out, this “fact” doesn't come from a study at all. Instead, it's from a short (739 word) article in the March/April 1993 issue (vol42, no2) of D&B Reports (which is no longer published). The article, written by Robert J. Klein, a founding editor of Money magazine, isn't available on the web, but I was recently able to read a copy.

It doesn't say what people (including Dave Ramsey) claim it says. Here's an excerpt:

Well-run businesses borrow money to finance plant, equipment and research. They do not borrow to pay operating expenses. Families should do the same. They should borrow to buy a house to live in, a washer and dryer to keep house more efficiently, a car for transportation to work, a college education for the kids. They should borrow to refinance existing debts at lower rates. They may even borrow to start or expand a family business. On principal, though, they should never borrow to pay for living expenses.

Sure, the article advocates against overuse of credit, but it doesn't say anything about people spending more with credit than without.

My point isn't that Dave Ramsey is wrong about this idea. My point is that he's citing a bogus study, and then hundreds (or thousands) of others are subsequently accepting what he says as gospel. My point is this: It always pays to question what you hear, and to do your own research. (You should even question me. I do my best to provide accurate information, but I'm only human.)

Note: You can actually find a number of real studies to support the claim that people tend to spend more with credit than with cash. (For example, here's a 2008 article from the Journal of Experimental Psychology: Applied that contains research into the effect of payment type on consumer behavior [PDF]. And a 1979 article from the Journal of Consumer Research. And an article from 1991 about the failure of competition in the credit card market [PDF]. And, best of all, a 2000 study from MIT's Sloan School of Management [PDF] that actually demonstrates that people do spend more with credit than without. (Thanks to GRS reader Sashie for pointing these out.)

So What?

Why care about this stuff? Why bother to fact-check seemingly harmless claims about money? For some people, it may not matter. But as I try to build a unified financial philosophy, it's important to know that I'm basing my beliefs on reality, and not on a bunch of conventional wisdom. I'm learning to question assumptions that I've held for a long time. Not all of them are correct.

For example, like most Americans, I used to believe that real estate always increased in value. As we've seen over the past five years, however, that's just not the case. (In fact, over the long term, both gold and real estate are relatively poor investments, barely offering any return above inflation.)

I recently polled my followers on Twitter (at both the @jdroth and @getrichslowly accounts) for other examples of money myths that smart people ought to question. Here are some of the more notable responses:

  • Several readers don't like the notion that “debt is a tool” or that “you need credit”. You can live in a modern world without credit, even though plenty of folks will try to convince you it's impossible.
  • @ericabiz said: “Worst one: When people think that being poor is somehow virtuous, and rich = evil or taking advantage of others. It's pervasive.” @mile73 said something similar: “If someone has ‘a lot' of money, it couldn't be because they worked hard to get it. It must be because they lucked into it.” These myths are most succinctly stated by @budgetsaresexy, who wrote that he dislikes the idea that “Money is for greedy people.” I agree. It's not wrong to be rich, folks. Money isn't a bad thing.
  • On a related note, many readers complained about the oft-cited Biblical quote, “Money is the root of all evil.” They pointed out that it's the love of money that's considered the root of all evil.
  • @crunchysue thinks it's a myth that “You can plan on your salary increasing throughout your lifetime.” This highlights how statistics can be deceiving. In general, salaries as a whole will probably increase over time. But that doesn't mean your salary will always increase. It's important to budget on what you actually earn, and not what you hope to earn in the future.
  • @mile73 doesn't like when people say, “There's no point in saving. You could get sick and lose it all.” This one bugs me, too. It's the whole “you can't take it with you” mentality. Just because you might get sick, and just because you can't take your wealth with you when you die, this doesn't mean you shouldn't save. Balance, people, balance!
  • @extremejacob doesn't like the myth that frugal is the same as cheap. He also doesn't like that most people measure standard of living in terms of spending and consumption.
  • A number of readers hate the popular belief that buying a home is always better than renting. As we saw recently, sometimes renting makes sense.
  • @chicagoelevated wrote that she's fed up with the idea that if you do what you love, the money will follow. She's pursuing a career in something she's passionate about, but she's seen first hand that hard work isn't always profitable. (Still, I think it's also bad to put up with a job you hate just to get a fat paycheck.)
  • @creditgoddess wrote: ” I don't like: ‘A bad credit rating stays with you for life.' Sure, if you don't change habits, but it will improve if you work at it.”
  • Several folks hate shopping “myths”. @ambermae hates, “The more you buy, the more you save.” @moneyhighway agrees, as does @weathershenker who notes that if a sign says “Save 15%”, you are spending 85%: “Sales can be good, but if you truly want to save, don't spend!” Great advice.

A couple of other folks dropped me notes by e-mail. For example, Claire wrote:

When I was in college, I found out what a bunch of bull “You'll appreciate it more if you pay for it yourself” was. I was fortunate to not have to take out loans, but I saw close friends struggle with paying for tuition since they had no support. We all valued our education equally. I didn't screw around & party and waste my opportunity at college; neither did my friends.

Think For Yourself

This has been a long post to make a simple point: Don't just accept conventional wisdom, and don't blindly heed the advice of financial “experts”. Listen to this stuff, sure, and consider it. But think for yourself. Do your own research. When you hear somebody make a claim — even if it's somebody you trust — seek independent verification before you make life decisions based on the information.

Do this for blogs (including this one), but also do it for books and magazines. The more you learn, the better you'll be able to spot errors and fallacies and situations that don't apply to you. You'll also find it easier to question sources that you once considered authoritative.

Remember: Nobody cares more about your money than you do. If you don't take the time to double-check the financial advice you receive (in person, in books, and in blogs), then there's a good chance you'll end up in financial trouble. Be smart, and look out for yourself.

What do you think of the money myths I've mentioned here? Are they myths? What myths bug you the most? Has a money myth ever led you into financial trouble? (I suspect that quite a few GRS readers have been hurt by the “your home will always increase in value” myth.) And, most of all, how do you learn to separate fact from fiction?

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SF_UK
SF_UK
10 years ago

The whole “real estate is an investment” thing gets me. I may buy a house/flat soon. But you know what? I’ll be buying it for what is, when you come down to it, its primary purpose. Because, and I know this may sound radical, I plan to live in it. This brings me on to the concept of “negative equity”. Sure, it sucks that you may owe more than your house is worth *right now*. But unless you are actually planning to move or sell today, or you can’t make your repayments, it’s meaningless. Houses are for living in. If,… Read more »

CB
CB
10 years ago

I really enjoyed this post. The Dave Ramsey one is kinda interesting to me since I’ve started going through parts of his Total Money Makeover. Actually, there are a few things that, while I see his point, I probably won’t do at least not yet. This concept really should be applied to everything you hear, especially regarding anything that is based on a statistic. Statistics, like money, are not inherently good or bad. But a study that is poorly set up or samples that are poorly chosen, can skew the data one way or the other, or (maybe more often)… Read more »

Mrs. Money
Mrs. Money
10 years ago

Wow, you really did a lot of research, JD! I know sometimes when I spend money I feel happier. Nothing wrong with that, right?!

Ingrid
Ingrid
10 years ago

Yes, I have seen many times how a certain phrase or number is taken for truth when its source is clouded in mystery, and is, at best, an exaggerated estimate – it certainly applies to several social causes I am involved in. Can be really misleading and even damaging. My family comes from the former Soviet Union and I have seen with my own eyes how much the convenience of Western appliances changes a lifestyle, freeing time and energy for other things. You certainly need money for that. As for questioning the established truths: To me, the idea of establishing… Read more »

Cara
Cara
10 years ago

JD, this post is an example of why I check out your blog every day. You really did your homework! I’m personally tired of the “money can’t buy happiness” myth. In my own experience, money can buy all sorts of things that are conducive to happiness. With money, things like a busted hot water heater or a health emergency are mere inconveniences rather than disasters. It buys comfort, options, peace of mind, and experiences. I find it more pleasurable and satisfying to be frugal by choice instead of by necessity. I can’t remember who said it, but I agree with… Read more »

Russ
Russ
10 years ago

An established ‘truth’ I dislike is “experiences are worth more than products”. I find that this is often untrue, and you can’t control which experiences remain memorable. I can barely remember most of the vacations I’ve ever taken, including an expensive trip to Barbados with lots of planned excursions about 7 years ago. If a genie appeared right now and offered to exchange my memories for the money I paid to obtain them, I’d agree like a shot. On the other hand, I still remember some of the toys I had as a child, decades ago.

Cindy
Cindy
10 years ago

You said “They pointed out that it’s the love of money that’s considered the root of all evil.”

It’s even less definite than that! Most translations say something like “Love of money is the root of all *kinds* of evil.”

I think we can all point to an example of evil that has nothing at all do with money, so it’s nice to know the Bible doesn’t contain such a blatant fallacy, huh?

josh
josh
10 years ago

Question everything Dave Ramsey says, he is in no way shape or form a creditable source. His only real financial background is the fact that he drove his finances into the ground before starting to make money off of people who knew less than he did on the subject.

Lara
Lara
10 years ago

The love of money quote may be actually even less definite than Cindy (#7) stated. It varies by translation, but I’m told that closest approximation to the original Greek is “For the love of money is *a* root of all kinds of evil.”

Hannah
Hannah
10 years ago

The money myth I hate most, without question, is “There’s no point in making more money because it will put you in a higher tax bracket and you will end up making less.”

Russell
Russell
8 years ago
Reply to  Hannah

This is especially true since (to my understanding; you should verify for yourself!) the tax brackets are incremental. For a single filer in 2011, you pay 10% on the first $8500, 15% on the next $26k, and so on. So if you move up a tax bracket, you only pay the higher rate on the income in excess of the bracket floor.

Moneychimp.com has some great tax calculators, but again, these can have bugs so you should double check their information.

Lizbeeth
Lizbeeth
10 years ago

I believe money does buy happiness. I rarely find miserable people at the country club, but often see them at Wal-Mart. Money by itself won’t make you happy, but it certainly affords you more opportunity and choice in life. It gives you the ability to do things that make you happy. Excellent article.

Beth
Beth
10 years ago

I totally agree with @chicagoelevated! I think it’s a fallacy to assume that everyone can earn lots of money doing what they love — if they can figure out what it is in the first place. I’d wager that most people earn a decent living doing jobs they like, but aren’t in love with.

MK
MK
10 years ago

Regarding whether you spend more with cash or credit, retail organizations certainly think you do. I worked for big box retail and they spent a lot of time and talent pushing credit cards. Their point of sale data showed that the average transaction with cash was about $10 and with the store credit card was more like $300. Having said that, I don’t have specific number because it was proprietary data (it’s also several years old) – however, retail is tracking this, and the pushing of credit bears out that THEY think you’ll spend more with their card. Maybe the… Read more »

Bartosz
Bartosz
10 years ago

@Ingrid #4: I think you make an important point re: emergency fund vs. high interest debt and it makes sense from the financial standpoint. But an emergency fund has also a psychological effect — having as little as $500 set aside for “emergencies” can give you a peace of mind needed to focus on paying off the debt.

Four Pillars
Four Pillars
10 years ago

Great article.

I honestly don’t know why people think of people like Ramsey/Kiyosaki etc as “gurus” – Ramsey has been bankrupt and just makes up stuff to support his argument (and make lots of $$).

As for money myths – I just don’t believe anything I hear anymore. 🙂

E
E
10 years ago

@Ingrid – the reason you need at least some sort of emergency fund before you pay off debt is because if you have an emergency and you don’t have an emergency fund, you will have to borrow MORE money to cover it, thus increasing your debt and continuing the vicious cycle. I remember reading about research that said that once you hit a certain point where you can meet all your basic needs, adding more money has a diminishing return on your happiness. I can’t find an official citation so maybe I am mistaken but it certainly makes sense. Going… Read more »

uncertain algorithm
uncertain algorithm
10 years ago

Many people here seem to misunderstand the Biblical idiom, “the love of money is the root of all evil.” For one, please tell me how the U.S. economic system mirrors the Roman economic system in terms of wealth and money (newsflash: the hardest workers in Rome, the slaves, could never be wealthy). In the United States, the average millionaire works at least forty five to seventy hours a week – we’re not talking the lazy rich like the Roman times (think of individuals like Catullus). Or, I’ll put it another way: find one passage in the Bible that denigrates hard… Read more »

Kat
Kat
10 years ago

Of course I spend more with credit cards: if something is $5 I’ll use the cash I have in my pocket, but if I am buying a $500 item, I don’t want to carry $500 in cash with me, and I want the protection that credit cards have, and points/miles. That doesn’t necessarily mean that I am overspending or “spending more” than if I didn’t have the credit card, if this is a planned purchase that I am paying off that same month. Agree that the Bible verse is about all “kinds” of evil, not all evil. Lots of evils… Read more »

Katy
Katy
10 years ago

I loved this post so much I had to comment. Fight the good fight, J.D.! Give that hearsay the old one-two.

I’ve been very put-off by a lot of “financial gurus” because they strike me as being more like cheerleaders than experts. Not to underplay their role – motivation is important, too. But you can’t be self-sufficient without a critical eye.

Nancy L.
Nancy L.
10 years ago

Sheesh JD! So many things to want to comment on! 🙂 Thanks for another awesome post! I feel compelled to point out a fallacy in Claire’s logic about why she feels that the homily “You’ll value it more if you pay for it yourself” is false. Her logic is that bc she values her experience in equal value to her classmates, there is no truth to the statement. However, following the statement itself, the comparison isn’t supposed to be made between her and her classmates, but rather internally within herself. Right now, because she’s only experienced one side of the… Read more »

Mendy
Mendy
10 years ago

Many thoughts came through as I read this post. #1 Happiness is relative. Even if it has been quantified in some way in scientific studies. Happiness in America is not the same as Happiness in Africa or anywhere else. It is very culturally based. #2 JD is citing merely one of Dave Ramsey’s teaching points as being not easily verified, however later in the post he verifies it is true with multiple references. I don’t think he is trying to discredit him in anyway, because he has over and over again told us to read his books on this blog.… Read more »

Rick Francis
Rick Francis
10 years ago

If you believe your money is evil- I would be willing to take that burden from you. How about some on investing? One myth that really bus me: It is easy to pick superior stocks by “doing your homework”. Mutual fund companies have huge research departments and the majority of them do NOT beat the market averages. If it was easy to beat the market with research the funds with the largest research departments would always beat the market!

-Rick Francis

Erin
Erin
10 years ago

I can totally support the idea that you spend more when you use credit. I DO IT!!! That’s why I don’t use credit cards anymore. Well, that and I hate debt. LOL I’m very bad about saying, go ahead and pick this and that up since I’m “putting it on the card anyway.” I’d guess that I double what I would have spent when I use the CC. But yes, I agree, you shouldn’t just take quotes and studies and statistics as ‘word’. But I must defend my man Dave Ramsey. 🙂 He may not be the go-to for everything… Read more »

J.D. Roth
J.D. Roth
10 years ago

Just to make it clear: I’m not dissing Dave Ramsey. IN GENERAL, I think he’s great. (Some of his faith-based policies irk me, but that’s a side issue.) His advice was pivotal in my financial turnaround. I’m just using this one thing as an example because it’s convenient to do so. I could have really laid into Robert Kiyosaki, whose bad advice probably played a role in the housing bubble. There’s a reason I don’t write much about Kiyosaki around here…

Bill
Bill
10 years ago

OK, slightly off-topic, but a near-half century spent as a writer and editor forces me to jump on this sentence: ‘On principal, though, they should never borrow to pay for living expenses.’

We know the writer meant ‘principle.’

Otherwise, a great post, as always.

Devbeth
Devbeth
10 years ago

I work at a large department store. They have their own credit card. They quote studies that show people using a store card spend 30% more than people who don’t. The solicitation you get at the checkout “May I put this on your *** account?” is for a reason!

Norman
Norman
10 years ago

Conventional wisdom says that carrying a mortgage is good so you can get the tax deduction and pay back with cheaper dollars through inflation. That has never made sense for me personally. A mortgage has led a lot of people into financial trouble. You spend so much more money on the interest than you get for a deduction. I’m not commenting to debate the pros and cons of having a mortgage, its just something that for myself, I’ve chosen to pay my mortgage off as quickly as possible so I don’t have years of interest charges. It also will provide… Read more »

Erica Douglass
Erica Douglass
10 years ago

“Families should do the same. They should borrow to buy a house to live in, a washer and dryer to keep house more efficiently, a car for transportation to work, a college education for the kids.” Doh. It’s crazy that Ramsey cites this. Hopefully he sees this article and updates his thesis! I think, if you don’t already have a washer/dryer, car, or college education, it may make sense to finance them. But if you already have them, it doesn’t really make sense to finance new ones (or more education.) Richard and I were talking last night about college. He’s… Read more »

Pattie
Pattie
10 years ago

Great post…and I, too, take issue with Claire’s statement. Her personal story is just that, her anectodal experience. (Right in the same ball park as “My grandfather smoked three packs a day and lived to be 103 without ever getting lung cancer.”) Just as the latter doesn’t change the FACT that MOST smokers WILL get lung disease, Claire’s statement doesn’t change the reality that MOST people who pay for for things themselves tend to value the service or product more. And great reporting on the non-existant Dave Ramsey “report”. I like the guy for the most part, and he helps… Read more »

Jessica
Jessica
10 years ago

@uncertain algorithm #17: “For one, please tell me how the U.S. economic system mirrors the Roman economic system in terms of wealth and money (newsflash: the hardest workers in Rome, the slaves, could never be wealthy).”

Sticking with the theme here, that’s actually completely untrue. There are lots of examples of ex-slaves becoming very wealthy, and you can read a satire on it in the story “Cena Trimalchionis.”

CB
CB
10 years ago

@josh: From your comment you don’t find Ramsey to be a credible source of information. Yet, you are reading a blog by someone who has a similar story. Not the multi-million real estate portfolio, but JD went through a similar process of getting into debt then working his way out. If you don’t find Ramsey a credible source why would you find JD a credible source? Also, for the record, on the whole I’ve enjoyed TMM and found a lot of what Ramsey says to be useful. I’ve just adapted his way to what works for me. (Not entirely sure… Read more »

Beth
Beth
10 years ago

@uncertain algorithm – I respectfully disagree. “Loving money” isn’t the same thing as having money (i.e. working hard for it and being prudent with it). The U.S. economic system is a bad example. It was greed — the love of money — that was behind all those policies and deals that got us into a crisis. There are many companies that put their bottom line ahead of the safety of their customers, the welfare of their employees and the health of the planet to earn more profit. In short, when people put their need for more money ahead of the… Read more »

TosaJen
TosaJen
10 years ago

I appreciate your persistence, JD. Yay for facts and research. There’s more than enough truthiness out there.

Rachel B
Rachel B
10 years ago

Great article, JD! I second @crunchysue’s comment about how salaries don’t always increase over time. Salaries get frozen. People need to take time off because of illness or family circumstances. Most people change jobs and careers several times in their lives and those transitions don’t always come with a salary increases.

I’ve seen a lot of my friends buy condos and homes that are beyond their means, because they believe that way more money will be coming in within a few years. I’m much more comfortable renting what I can afford today.

ami | 40daystochange
ami | 40daystochange
10 years ago

JD: I’m impressed with your willingness to dig until you found the truth.

Bottom line for me: we each have to dig to find what’s ‘true’ for ourselves. What’s true for us may or may not be true for our neighbors.

Kevin M
Kevin M
10 years ago

You forgot the biggest myth of all – that going to college to get a degree with guarantee you a job and the American Dream^(TM).

Another pet peeve of mine is when people say they don’t want to make more money because they’ll be in a higher tax bracket – as if all their additional money, plus extra will be used to pay taxes. Scary.

Kent K
Kent K
10 years ago

JD for me one of the biggest myths is that a college education will lead to higher income. While the odds are in your favor if your looking for a regular 9-5 job, I know several people who never went to college that make far more money than I do. I think it’s more about how you apply your knowledge to your specific occupation that determines your success, and you don’t need a college education for that. In realistic terms, those that have specific knowledge in a field where the demand for the skill is higher than the supply of… Read more »

CERB
CERB
10 years ago

Great post. I don’t think that money can “buy” happiness, but a lack of money sure can make one miserable. #5 Cara – I totally agree with your comment. #16 E – The book “Your Money Or Your Life” covers the concept of diminishing return on your happiness. One of my pet peeves of financial statements is that you should never buy a new car, because “the second you drive it off the lot it depreciates several thousand dollars”. Well, that would be an issue if you needed to sell it the second you drove it off the lot. I’ve… Read more »

Brent
Brent
10 years ago

Thanks. I loved this post.
I’d like to add a couple
1. Education is always a good investment.
2. Anyone can start their own business and be their own boss.
3. The only thing of value in a crisis is gold.
Many hold to generalizations because some simple rules like “earn more than you spend” always work. Not all of em do, evaluate your life’s rules and fit them accordingly.

Zoom
Zoom
10 years ago

The myth that in leveraging a sale “I saved X% or $X” – I would go a step further and say that a sale could a single justification to buy something you don’t need. I hear “yeah, but I got it on sale” all the time from many different people. It’s powerful.

As far as the Biblical reference, “the love of money is the root of all evil.”…perhaps if it read “*blind* love of money *can* be *a* root of evil”…

Kevin
Kevin
10 years ago

@CB: “If you don’t find Ramsey a credible source why would you find JD a credible source?” I can’t speak for Josh, but personally, the difference is humility. JD openly admits when a topic is veering into an area of which he has little understanding, and readly concedes when his information might be incorrect or incomplete. I can’t recall ever really catching JD stating things that are verifiably untrue, and ignoring corrections from his readers/listeners. Dave Ramsey, on the other hand, frequently states things that are clearly incorrect, yet he repeats them over and over, maintaining a willful ignorance of… Read more »

Alexandra
Alexandra
10 years ago

Please do read the post over at Bad Money Advice about Money as Medicine: http://badmoneyadvice.com/2010/04/money-as-medicine.html

Apparently, just touching money made people feel better! How’s that for backing up the “myth” that money makes you happy.

Nancy L.
Nancy L.
10 years ago

@CERB (#37) Thanks for pointing that out! I feel like a lot of people are still believing in car market “truths” that were true maybe up until the early 80s, but are not nearly as true today. My last car I purchased at the end of a model year, and it was $2000 cheaper than the 1-2 year old used cars of the same model. All that and I got to enjoy the full warranty as well! Perhaps I would have saved more on the used model if I could have found a private seller trying to sell the same… Read more »

jeffeb3
jeffeb3
10 years ago

I would argue that these examples show why not to think for yourself. Those myths are easy to believe if you just think about them. The right thing to do is to trust the scientific method, and if you don’t want to do the work (and who does) then you should find people who are using the scientific method to sustain/refute these claims. Science isn’t just for molecules and planets, it’s useful for finding truth in anything. That being said, I am absolutely the worst at this. I come to conclusions in my head without ever testing them, because it’s… Read more »

Budgeting in the Fun Stuff
Budgeting in the Fun Stuff
10 years ago

I remember that my husband and I both agreed that money could buy happiness on one of our dates when we first met and started laughing since we were the only 2 people we knew at the time who agreed on that. Without money, you can’t afford security (a home, food, etc). With money, you can afford the basics, to save for your future, and to do fun stuff in between. It also seems to make sense that at some point, more money will not create that much more happiness. My husband and I would love to have a few… Read more »

guinness416
guinness416
10 years ago

Really good post JD! I always enjoy Nicole’s great comments so I’m glad to hear she’s being doing some work for you. (Jim from Free by 50 is similarly reality based in many comments threads).

Also, on your readers’ myths – I didn’t see your original tweets but the “do what you love and the money will follow” and the Claire’s education one are really, really good examples and are all over money blogs.

Nicole
Nicole
10 years ago

I also LOVE Dave Ramsey. There are a lot more studies for him to cite now on the issue of credit card spending than there were back when he first wrote Financial Peace University. http://server1.tepper.cmu.edu/Seminars/docs/CreditCardStudy%2009.10.01.pdf is especially interesting though… Looks like who spends more varies by type. My other recent favorite for conceived wisdom is that it takes 21 days to make/break a habit. Apparently that one comes from a book on how long it takes for a new amputee to lose the phantom limb, on average. Actual habits take different amounts of time depending on the habit (which makes… Read more »

Adam
Adam
10 years ago

Wow, great find on Dave Ramsey’s “people spend more with credit”. That should be a topic on bad money advice too…think I might send ole Frank C an email asking him to expose that in detail!

Its one of those things that sounds true and you believe it, but would be hard to do an actual study on it.

Tyler Karaszewski
Tyler Karaszewski
10 years ago

I’m quoting a friend of mine, from a conversation I was having on Facebook about people approaching 30 and still being in college. This is my friend: “I’m bitter about the lack of degree requirement in a lot of jobs that I am skilled at. If my experience is the main focus for employment as it has seemed to be, I would have gladly dropped the $30k debt and just worked. In a way, my going to University felt like I was appeasing my parents a lot and their need to brag about having a kid in University.” I’m acquainted… Read more »

Frankerson P
Frankerson P
10 years ago

Great post!

I deeply regret buying a house six years ago. Of course, at the time, it was a ‘no-brainer’ because real estate is such an AMAZING investment.

It caused some serious financial advantage, but at least I’ve learned to question these common financial myths and I should be better off in the future.

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