When you move into your own place, you move all your worldly goods and, most precious to your heart, your family into it.

Do you want to protect it? Of course you do.

www.istockphoto.com/dny59

Home insurance comparison sites profess that home insurance is absolutely essential, but just how essential is it?

In the modern world, we’re faced with many dangers, and one of the biggest threats to our family’s safety is intrusion into the home.

Theft isn’t a construct of modern times; it’s an age-old problem:

“If a man steals an ox or a sheep, and kills it or sells it, he shall repay five oxen for an ox, and four sheep for a sheep. If a thief is found breaking in and is struck so that he dies, there shall be no bloodguilt for him, but if the sun has risen on him, there shall be bloodguilt for him. He shall surely pay. If he has nothing, then he shall be sold for his theft. If the stolen beast is found alive in his possession, whether it is an ox or a donkey or a sheep, he shall pay double. If a man causes a field or vineyard to be grazed over, or lets his beast loose and it feeds in another man’s field, he shall make restitution from the best in his own field and in his own vineyard.”

Exodus 22:1-31

While the passage above talks about the repayment of a thief’s debt, the era in which we live requires us to deal with the fall out of theft very differently. Over the years, man has come up with an industry that compensates the victims of theft and, if the thief is caught, punishes and (hopefully) rehabilitates the thief. It’s now necessary because of the very nature of the communities we live in; where in Christ’s time and many hundreds of years afterwards, we tended to live in small communities, we now often do not know even our next door neighbours.

Think back to 1 Timothy 5:8, who said: “But if anyone does not provide for his relatives, and especially for members of his household, he has denied the faith and is worse than an unbeliever.” In that spirit, providing for your family means working hard to protect them by whatever means possible.

It’s therefore necessary to make sure your family home is as secure as possible. The doors and windows should be sturdy and have good locking systems. The house shouldn’t be concealed by fencing or foliage, and good burglar alarm and security light systems are highly recommended, if not essential.

When that fails, what’s your next means of protection? Quite simply, it’s homeowner’s insurance. Whether you like it or not, you’re safer to have it than not in this day and age. Or so we’re told.

My quandary, though, is deciding whether or not it’s fair to say that buying into a homeowner’s insurance plan is simply not trusting God to provide. You can buy varying degrees of coverage, depending on what you can afford or what you’re willing to pay for this form of protection. By doing this, are you merely trying to insure yourself against God’s will? We all know that this just isn’t possible, so why do it?

It’s a really tough one. But in the end, we must reconcile with ourselves the need to protect our family in the often-hostile world in which we live. We must strike a balance between peace of mind and how we believe Christ wants us to live in the world he created for us. Yes, insurance is a construct of man, but crime is a sin and a burden mankind must bear and deal with best it can.

This is a guest post by moneysupermarket.com

With all the credit card debt out there, it seems like it would be helpful to define what appropriate credit card usage is.

This begins with a preliminary observation. That is simply this – credit card usage is a choice. Thus, if you’ve proven to yourself that you can’t use them appropriately, then you’re better off (and so is your bank account) if you simply stop using credit cards.

www.istockphoto.com/ alexandernovikov

1. Always pay off your balance in full every month.

Good guidelines always have good consequences. In this case, I suggest that if you ever go beyond this rule that you should either stop using credit cards for a six month period, or stop using them all together.

Credit cards in the hands of people who don’t pay off their bills are a very dangerous thing.

2. Never purchase anything over $100 (or a similar threshold) on a credit card unless you decided to buy it before you left the house.

This has been a long standing rule in our home. If I’ve left home with the plan to buy a TV for $300, then I can use the credit card because it is not a spontaneous purchase. If, however, I’m standing in front of a nice new TV, I cannot use the credit card because I may be tempted to go beyond my budget.

3. Never purchase anything over $100 (or a similar threshold) on a credit card without discussing it with your spouse.

Discovering a larger than normal purchase when looking over the bill at the end of the month is not an appropriate way to find out about a household expense. Communicate with your spouse beforehand.

4. Always review your monthly statement.

One of the keys to credit card usage is paying attention. I remember a few years ago when I noticed a charge on our credit card bill. I came to find out that I had signed up for something that would continue charging me every month until I cancelled. By reviewing my statement I was able to catch this discrepancy.

5. Always purchase electronics on your credit card.

One of the nice benefits of credit cards is that they offer certain purchase protections and warranties. You can review the terms and conditions on your card to see what benefits you have. If you pay with cash, you’ll lose out on this benefit that is included with your card. Remember, you should follow this in line with the other appropriate usage tips above.

6. Always maximize your credit card rewards.

If you are responsibly using credit cards as I’ve outlined above, you may as well be getting some credit card rewards out of your spending. This can be in the form of cash back rewards, travel rewards, or both. As an example, the Chase Sapphire Preferred card allows you to earn Ultimate Rewards points. Those points can be used to buy gift cards, purchase travel, or transfer to select frequent flyer mileage programs.

What guidelines do you use to help regulate your credit card spending?

This is a guest post by Craig Ford. At Help Me Travel Cheap Craig teaches people how to find the best travel credit card sign up bonuses so they can get free travel.

Identity theft is when someone uses your personally identifiable information (like Social Security number, financial account numbers, credit card numbers, etc.) to commit crimes or fraud.

Identity theft is a growing crime these days, and it’s important to know about identity theft protection so you can guard against unwanted compromises with your financial information.

Istockphoto.com/Selimaksan

Below you’ll find stats on identity theft and some ways the Federal Trade Commission is encouraging you to protect yourself from identity theft.

Statistics on Identity Theft

Here are the  latest statistics on identity theft according to Identity Hawk:

• There were more than 11 million ID Theft cases in 2009
• 66% of stolen personal information is used to open new credit accounts
• 28% is used to buy cellphone subscriptions
• At least 33% open new checking accounts to write bad checks
• An identity theft victim spends on average 330 hours and $1,000 clearing his or her name
• 70% are unsuccessful in removing negative credit information from their credit reports
• 47% of victims experience difficulty getting any kind of credit
• 40% report profound stress in their personal lives as a result of identity theft
• 11% say that the theft has impaired their ability to get jobs (with more employers looking at applicants’ credit information when making hiring decisions, this trend is expected to increase)
• 43% of victims think they know the thieves who stole their personal information

Helpful Identity Theft Protection Tips

The FTC has a catchy way to remember identity theft protection tips. You can view the document here.  Here’s what it says:

Deter

• Shred financial documents and paperwork with personal information before you discard them.
• Protect your Social Security number. Don’t carry your Social Security card in your wallet or write your Social Security number on a check. Give it out only if absolutely necessary or ask to use another identifier.
• Don’t give out personal information on the phone, through the mail, or over the Internet unless you know who you are dealing with. Avoid disclosing personal financial information when using public wireless connections.
• Never click on links sent in unsolicited emails; instead, type in a web address you know. Use firewalls, anti-spyware, and anti-virus software to protect your home computer; keep them up-to-date.
• Don’t use an obvious password like your birth date, your mother’s maiden name, or the last four digits of your Social Security number.
• Keep your personal information in a secure place at home, especially if you have roommates, employ outside help or are having work done in your house.

Detect

• Be alert to signs that require immediate attention:
  • Bills that do not arrive as expected
  • Unexpected credit cards or account statements
  • Denials of credit for no apparent reason
  • Calls or letters about purchases you did not make
  • Charges on your financial statements that you don’t recognize

• Inspect your credit report:
  • Credit reports contain information about you, including what accounts you have and your bill paying history.
  • The law requires the major nationwide consumer reporting companies—Equifax, Experian, and TransUnion—to give you a free copy of your credit report every 12 months if you ask for it.
  • Visit www.AnnualCreditReport.com or call 1-877-322-8228, a service created by these three companies, to order your free annual credit reports. You also can write: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
  • If you see accounts or addresses you don’t recognize or information that is inaccurate, contact the credit reporting company and the information provider. To find out how to correct errors on your credit report, visit ftc.gov/idtheft.

Defend

• Place a “Fraud Alert” on your credit reports, and review the reports carefully. The alert tells creditors to follow certain procedures before they open new accounts in your name or make changes to your existing accounts. The three nationwide consumer reporting companies have toll-free numbers for placing an initial 90-day fraud alert; a call to one company is sufficient:
  • Experian: 1-888-EXPERIAN (397-3742)
  • TransUnion: 1-800-680-7289
  • Equifax: 1-800-525-6285

  Placing a fraud alert entitles you to free copies of your credit reports. Look for inquiries from companies you haven’t
  contacted, accounts you didn’t open, and debts on your accounts that you can’t explain.

• Contact the security or fraud departments of each company where an account was opened or charged without your okay.
  • Follow up in writing, with copies of supporting documents.
  • Use the ID Theft Affidavit at ftc.gov/idtheft to support your written statement.
  • Ask for verification that the disputed account has been dealt with and the fraudulent debts discharged.
  • Keep copies of documents and records of your conversations about the theft.
• File a police report. File a report with law enforcement officials to help you correct your credit report and deal with creditors who may want proof of the crime.
• Report the theft to the Federal Trade Commission. Your report helps law enforcement officials across the country in their investigations.
  • Online: ftc.gov/idtheft
  • By phone: 1-877-ID-THEFT (438-4338) or TTY, 1-866-653-4261
  • By mail: Identity Theft Clearinghouse, Federal Trade Commission, Washington, DC 20580

Did you know a simple way to make money might be sitting right in your driveway?

That’s right! Your vehicle can be a simple way to make money when you are feeling a bit strapped.

Not only will these jobs assist in paying monthly car expenses, including insurance, but your car can also help make additional money to assist in paying other monthly expenses.

istockphoto.com/henrik5000

8 Simple Ways to Make Money and Turn Your Car into Extra Cash

1. Turn your Car into a Billboard on Four Wheels

While you are looking for a simple way to make money, many local businesses in your area are probably looking to save money with advertising.

Transforming your four-wheeled friend to become a vehicle for outdoor advertising is very easy to do.

There are a number of websites where you can register your car to get “wrapped” with an advertisement for a business and make money for just driving your car around such as:

• GasforFree.com
• FreeCarMedia.com
• AdSmart AutoAds
• AutoWrapped.com

Just remember the company may ask you to park your car at certain local events for further advertisement. Furthermore, always read over any contracts to see how long the contract is for.

The guys at WikiHow tell you all about turning your car into an advertisement.

2. Become a Personal Driver

Many times people without vehicles or the elderly are stuck having to take public transportation to doctor appointments and to run errands.

Advertise your services as a personal driver for those who need to get from point A to point B. You may have to check if you need to get a special kind of livery license as well as check with any insurance requirements first.

However, if you need a simple way to make money and love to drive around and meet new people, it could be a great avenue.

3. Start or Join a Courier Service

If you like to drive, why not deliver a package while you are on the road? There are a number of websites where you register and are contacted when you need to pick up and drop something off. Items can be anything from important documents, dry cleaning, to a birthday cake for a children’s party. These websites allow you to search for items in areas where you normally travel. If you are selected to be the courier, then just follow the instructions, deliver the item, and get paid for it.

4. Rent out your Car in a Peer-to-Peer Rental Program

Do you have a spare car sitting in your driveway that you are not using? Are you going on vacation for two weeks and have no use for your car?

Think about joining a peer-to-peer car rental program where you car is rented out for money when you don’t need it.

It is very simple way to make money and there are a number of websites that promote this kind of service.

You do not have to accept all bookings and a majority of the peer-to-peer car rental companies supply the additional insurance required. If you only use your car during the week to commute to work, rent it out on weekends for some quick cash.

5. Join a Car Share

While joining a car share will not make you any new money, it will help you save more money, which is just as good.

If you live in close proximity to some of your fellow employees, ask them about carpooling. You give them a ride to work, and in turn, everyone splits the cost of gas.

The same could be done with taking children to school. If a number of children live in the area, say to the parents that you will take them to school every morning and the parents pay a portion of gas.

Again, you may not make any kind of profit, but you do have extra money that can now be put toward other bills and expenditures.

6. Become a Driving Instructor

Becoming a driving instructor is a great idea. Of-age drivers are always looking to gain practice while driving but not all of them can afford driving schools.

Not only do you make money, but you teach future generations how to drive safely on the road.

However, often this requires minimal investment from the car owner to have a passenger’s side break installed in case a lesson gets out of control.

As well, check with the state for any specific licenses or insurance requirements.

7. Deliver Groceries

Elderly folks and those without personal transportation often have a difficult time getting their groceries.

They either have to rely on a family member or a friend to transport them, pay high taxi fares, or lug all groceries on a bus.

It can be very difficult. Advertise that you can assist with grocery shopping.

If the person cannot leave their home, you will do the shopping for them, and if they can leave, then you will drop them off and pick them up after at a price that is less than the average taxi.

 8. Transport Peoples Pets

No matter if you own a small or large vehicle, look into helping pet owners in your area with pet transportation.

Busy pet owners, pet owners who do not have a vehicle themselves, and the elderly who are not able to leave their home easily with a pet in tow may need assistance taking their pets to and from boarding facilities, vet visits, and grooming appointments.

For a simple way to make money, combine the pet transportation service with pet sitting.

 Kristy writes for Drive My Car Rentals a new peer to peer car rental community, where you can save up to 60% on the cost of traditional car rental companies. Whether you’re seeking car rentals in Melbourne or Darwin, DriveMyCarRentals.com.au have something for everyone.

Here’s a question about Social Security that I came across not too long ago:

I’m in my 60′s and am receiving Social Security every month.  How much, if any, can I still contribute to my Roth IRA?

www.istockphoto.com/kameleon007

In other words, the question is  – Is Social Security income?  Or more specifically, is it earned income.  So here’s the answer:

Social Security Does Count as Income

Yes, Social Security is definitely income received.  However, it doesn’t mean it’s fully taxable.  To the extent that the IRS looks at your Social Security as income that must be included for tax purposes depends upon how much income you earn from other sources and your marital status.

In 2010, the IRS has base amounts of:

• $32,000 for married couples filing jointly
• $25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouses at any time during the year
• $0 for married persons filing separately who lived together during the year

In other words, if you make more than the base amounts you must include Social Security as income for tax purposes.  To learn more check out Publication 915 from the IRS.

Social Security Does Not Count as Earned Income

Is Social Security income?  Not in the sense of earned income. Social Security income is not earned. In order to contribute to a Roth IRA (as the question asks) or a Traditional IRA, you must have earned income equal to the amount of your contribution.

Earned income includes:

• wages
• salaries
• commissions
• professional fees
• bonuses
• self-employment income, etc.

You could have income from any of these sources and contribute that earned income to a Roth IRA or Traditional IRA.

The max contributions for 2011 are $5,000 per individual under age 50 and $6,000 per individual if over age 50.

The Answer to the Question

The answer to this question is, “It depends.”  It really depends if this individual is receiving any type of earned income.  If so, then they can contribute any amount of that earned income up to $6,000.

If Social Security is their only source of income, then the answer is no, they cannot contribute to a Roth IRA.

Have a Question?

Contact me with your questions. Yours could be included in the next blog post!

You don’t have to be a millionaire to be happy with your finances.

Being content with your personal wealth is as much about being in control of your money as the actual amount you have in your account: having a comfortable, well-managed budget, spending wisely, and keeping on top of any debts you may have.

Let’s look at some of the best ways to improve your personal wealth.

www.istockphoto.com/ayzak

Keep an eye on your money

It can be very easy to lose control of your finances if you don’t know where you’re up to with them. Keeping a close eye on your money – how much income you receive every month and what your outgoings are – can be the first step to improving your control over your money.

Most banks now offer online and telephone banking services, which can make checking your balances quick and easy – even when you’re on the go. Checking over paper statements can also help you keep track of what you’ve spent – and help you make any changes to your spending habits which you think could improve your finances.

You could also think about keeping your receipts every month and/or keeping a ‘spending diary’ to record all your monthly outgoings.

Manage your debts well

Many of us have unsecured debts on things like credit cards, personal loans, and overdrafts – and though having debts doesn’t have to be a bad thing, paying them off as quickly as possible can give you peace of mind, minimize the interest you pay, and reduce the risk of facing money worries in the future.

Some practical tips for managing debt include:

• Consider reducing the number of credit cards you have to just one – making it easier to keep track of
• ‘Overpay’ your unsecured debts wherever possible by making more than the minimum monthly repayments
• Try and repay your credit card balance as fast as you can to reduce the amount of interest you’ll repay in the long term.

And remember – if you’re really struggling to repay any of your debts, it’s important to get professional advice. For a look at a few different approaches, here’s a quick guide to help you get out of debt.

Increase your income

We’d all like to have a bit more money in our pockets – whether it’s to make paying the household bills a bit easier every month, to save up towards a holiday, or to treat ourselves to something nice once in a while. There are several possible ways of boosting your income and giving your budget a bit more flexibility.

You could think about:

• Working some extra hours if your boss is looking for people to do over-time
• Selling clothes, CDs or electronic equipment you no longer use
• Taking in a lodger and charging them for monthly rent and bills.

Remember that being secure in your personal wealth is about finding the right approach for your situation – so always set yourself realistic goals that you’re confident you can commit to, and that will make you feel happier about your finances in the long term.

Useful webpages:

• http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm
• http://www.mymoney.gov/category/topics/managing-debt-and-credit.html

This has been a guest post from Melanie Taylor at ThinkMoney.com

In our last article, we talked about 5 money myths about housing and taxes.

That was based on an article posted by Investopedia, which discussed various money myths that can end up being costly.

Today, we will talk about misconceptions surrounding investing and money.

5 Money Myths About Investing And Money

I Don’t Have Enough Money To Start Investing

There are many online brokers that will allow you to start an account with less than $50! That means that there really isn’t much of a barrier left to begin investing.

Of course, you can’t buy a lot of anything with $50, but getting started is usually the hardest part.

If you are saving for retirement or some other goal, starting today – even with small, monthly deposits – can make a huge difference when you need to rely on that money!

Once you get a little momentum, you’ll be motivated to take advantage of both 401k contribution limits and IRA contribution limits. But the key is to start today.

www.istockphoto.com/kiamsoon

The Stock Market Is Tanking, So I Should Sell My Investments And Get Out Before Things Get Any Worse

This is one that really bugs me because it shows complete panic and a failure to think rationally. Let’s take a look at how this usually plays out…

People get fearful and panic when stock prices fall. That causes them to sell at or near the lowest possible point. Then when the market starts to recover and prices rise quickly, they jump back in and buy at a very high price – the price is usually pumped up by irrational exuberance, and will drop to a more reasonable level shortly.

So, what usually happens is that they buy at a high price and then sell at a low price. In order to be successful at investing, we need to be disciplined enough to do the opposite. That means that we can’t just follow the crowd during times of panic or excess excitement. We need to embrace a contrarian strategy!

I’m Young – I Don’t Need To Worry About Saving For Retirement Yet. / I’m Old – It’s Too Late For Me To Start Saving For Retirement

Even though it is now harder for a creditor to garnish Social Security benefits, it would still be wise for you to set up other means of retirement savings now! There are two things that you can take advantage of in your youth – compound interest and time to recover from mistakes. You will need both if you plan to maintain a decent standard of living in retirement.

If you are closer to retirement, then you can still take advantage of catch-up contributions and your employer 401k match. Keep in mind that there is no rule that states that you can’t save for retirement outside of a traditional “retirement” account. You just might not get the same tax breaks, but you can still put money aside for your golden years.

If you are getting a late start with your retirement savings, this may end up being the best retirement plan for you!

You Get What You Pay For

Considering the fact that people end up paying different prices for the same item/service, this idea can’t be completely true. If you follow this line of thinking, you will be stuck paying the highest price for every thing that you buy, or be willing to pay for maintenance and/or replacements often.

This money myth is usually given by those who wish to justify a huge purchase. They claim that being careful with your finances and looking for a bargain, will cause you to buy a cheap product that will need replacing often.

As with anything in life, you can’t just assume something is true just because you hear it often. As you can see, doing so can have a tremendously negative effect on your finances!

Carrying A Balance On My Credit Card Will Improve My Credit Rating

When I first got a credit card, I heard this money myth a lot. Unfortunately, it is still going strong. Many people think that in order for a credit card to have a positive effect on your score, you need to carry a balance each month, and if you pay it off at the end of the month, it will negate that positive effect.

This thought has caused many people who had the money to pay off their credit card at the end of the month, to only pay a portion of it, and having to pay interest on the rest!

When we talked about ways to increase your credit score, we mentioned that your credit card balances play a part in determining your rating. However, the most important things to know about your balance is that you should pay it off each month, and you should keep it under 30% of your available credit.

You can even use your card to cover your living expenses – in order to take advantage of certain credit card benefits – but just be sure to pay it all of at the end of the month! This will have the most positive effect on your credit score.

Reader Questions

1. How many of these money myths have you believed at some point in the past?
2. Which ones do you still think may be true?
3. How do myths that have been proven wrong time and time again, continue to stay popular across generations?

What is diversification?

Merriam Webster defines it as giving variety to something.

Variety is good. 

It’s good in life, in business, and particularly with our savings.

www.istockphoto.com/enderbirer

The idea of diversifying has been around a long time.

With today’s market volatility, it’s increasingly important to answer the question – what is diversification – through the use of four different lenses.

An acronym is helpful to understand the lens:

What is Diversification from the P.I.T.T.?

1. Product

What is diversification of products?

Diversification of products simply means that you utilize a variety of investment vehicles.

Some products offer guaranteed rates, others offer guaranteed income (with fees of course).

Other products offer downside protection. 

Products are designed with different functions.  It’s important to have a variety of products when it comes to our retirement savings.

2. Investment

What is diversification of investments? 

This means you diversify across asset classes with stocks, bonds, and alternative investments.

You also want to look at diversifying within those asset classes both by different types of stocks, but also diversifying with numbers of stocks.

An example of diversifying within asset classes would be choosing defensive positions during difficult times like dividend-paying stocks, consumer staples, or precious metals.

This is a key to adding additional returns during difficult markets.

3. Time 

How do you diversify through a time lens?

This means you have short, medium, and long-term investments.

If you have an emergency fund and something happens to your job, you won’t have to take an early IRA withdrawal.

You will be able to weather that storm because you’ll have short-term investments.

Some products with guarantees may have time schedules that you must keep to avoid charges.

Having shorter term investment money is a wise diversification move.

4. Tax

What is diversification for taxes?

Diversification from a tax standpoint means that you work at balancing tax deferred, “taxed now”, and tax-free accounts.

In other words you intentionally build tax-deferred assets like IRAs and  401ks.

You also think about building regular brokerage accounts or what would be called non-qualified money.

And lastly, you think about building tax free money with a Roth IRA or Roth 401k.

Following these guidelines does not insure investor success, however, diversifying your savings from these standpoints can help reduce risk and generate more consistent returns over the long run.

As always, be sure to consult with a tax advisor when making tax decisions.

Please Retweet the post or share on Facebook by using the buttons below!

This post was brought to you by Dividend Stocks Online:
Visit our site to find why high dividend stocks make the best investments for growth and steady income.

Readers, post your comments:

• What is diversification to you?
• Do you diversify from the PITT? 
• What other diversification have you done (like income?)

Many of us grow up hearing various sayings about money. Some of them are passed down as wise quotes, while others may be pieces of advice given to us by by someone trying to help us out. A small number of these things turn out to be good, sound advice; however, the majority of them are really nothing more than money myths!  

Recently, Investopedia posted an article giving 10 “bank-breaking” money myths. Because I love reading and analyzing these ideas, I thought it would be good for us to take a look at them here.

istockphoto.com/dny59

First we will look at housing and tax money myths, and then we will look at investment and credit-related financial misconceptions!  

Money Myths About Housing And Taxes

If I Get A Raise That Bumps Me Into A Higher Tax Bracket, I’ll Actually Take Home Less Money

Since I have clients that come to me for tax preparation, I hear this one all the time. It is completely false to assume that you will actually take home less (or even the same amount) money because a raise or annual bonus has pushed you into a higher tax bracket.  

The reason for this is that our tax system is set up in such a way, that your income is taxed in tiers. When you move into a higher tax bracket, what really happens is that the rate of tax that you pay on the last dollars you earn increases. This is known as your marginal tax rate – which is broken out on these income tax rate tables.  

In short, only the amount that pushed you over your former threshold will be taxed at the higher rate. All other dollars earned up to that point will be taxed at lower rates (again, this is broken out in detail in the linked tables).  

Renting Is Like Throwing Away Money

This is probably the one that I hear most often – because I am renting. People always tell me that I’m throwing my money away, and that I should go out and borrow hundreds of thousands of dollars in order to put a stop to this (even when I tell them that I am trying to pay off debt, they still insist)! But, does this money myth really make sense? Of course not (which is why I asked the question )!  

Here is how you can tell if you are throwing your money away as a renter: When you pay your rent each month, do you get anything in return? If not, then you are being ripped off and indeed throwing your money away. However, if you are getting anything in return (such as A PLACE TO LIVE!!!), then don’t worry, you aren’t lighting dollar bills on fire!  

Of course, if you are paying too much for your rent, that’s a different story.  

The Investopedia article made a good analogy:  

Do you consider the money you spend on food to be thrown away? What about the cash you spend on gas? Both of these expenses are for items you purchase regularly that get used up and appear to have no lasting value, but which are necessary to carry about daily activities. Rent falls into the same category.  

I won’t go into all of the other reasons why this thought doesn’t make sense, or how you “throw away money” (by using the same logic) as a homeowner, because that will take up the entire article. I believe that simply focusing on just how illogical this money myth actually is, will show that it’s wrong.  

Paying for a service, experience, or even a temporary possession are all valid ways of spending your money, and they should be evaluated just like all other expenses. You want to avoid paying more for something than the value that it holds for you.  

Income Tax Is Illegal

This is a funny one that I hope is finally dying down. I know that there are many reasons given for this. I have heard the two mentioned in the original article – the tax code states that paying taxes is voluntary, and the IRS is not an agency of the United States.  

Without going into all the detail – thankfully, the IRS addresses most of the common myths here – these statements are all false! You have to pay whatever taxes you owe according to the tax code.  

Home Ownership Is A Surefire Investment Strategy

I guess this is why renting equates to throwing your money away! Even after almost four years with the housing market being in the tank, and many “investors” left holding onto multiple mortgages on properties in various counties/states, begging the government and the banks for a bailout; you can still hear people holding on to this myth.  

I won’t write about how housing performed as an “investment” before 2002 – because I would only receive comments about that one point, and everything else would be ignored (I’m not sure why housing is such an emotional topic).  

Let me just state that the housing market is just like any other market in which people invest. There will be people who make money no matter what the economy is doing, and there will be people losing money at all times as well.  

There is risk in all types of investments, we will always face trade-offs, and whether you are investing in your education, housing, stocks, or even your own business, you can’t avoid it!  

One of the major advantages of home ownership is being able to deduct your mortgage interest

So many people justify borrowing tons of money for a place to live, by talking about deducting the interest on their mortgage. Unfortunately, they believe this because there are a few things about this deduction that they probably don’t realize.  

First, this benefit is usually not available to homeowners who claim the standard deduction. That means that millions of people will see no benefit at all based on their current tax situation.  

Also, because of the nature of a deduction (read our complete explanation of tax deductions and credits), they will only receive a partial (probably around 25% or less) savings on their tax bill.  

It is nice that they government decides to partially subsidize home ownership by offering tax benefits, but this really shouldn’t be considered when you are deciding to take out a mortgage!  

Reader Questions

1. How many of these money myths have you believed at some point in the past?
2. Which ones do you still think may be true?
3. How do myths that have been proven wrong time and time again, continue to stay popular across generations?

When we think about saving up for our golden years, we often consider 401k contribution limits, Roth IRA tax benefits, and withdrawal rates. However, one major component of planning for one’s future is usually missing; most people fail to consider both marriage and retirement when thinking ahead.

Marriage And Retirement Planning: The Need For Communication

Just like in other areas of household finances, little communication exists between a husband and wife when it comes to retirement planning. Considering the fact that many Americans have neglected proper planning and analysis when it comes to the future (or even the present, if you judge that based on our greed), it should come as no surprise that many people have not discussed the details of retirement with their spouse. Take a look at these alarming numbers from a recent Market Watch article:

Almost two-thirds of couples don’t agree on the age at which they’ll retire, and one-third of couples disagree or don’t know where they’ll live once they retire, according to a survey of 648 married couples (a total of 1,296 people), conducted for Fidelity Investments by Richard Day Research Inc.

Those numbers are pretty scary. It’s hard to imagine a couple never discussing something as basic and foundational such as when and where they would like to retire. The fact that they don’t agree on these issues is cause for great concern. For instance, how can they know how much money they will ultimately need, if they do not know how much longer they will be working or how much it will cost for them to live?

Unfortunately, the disagreement and confusion doesn’t stop there:

Forty-seven percent of couples don’t agree on whether they’ll work in retirement, according to the survey of people aged 46 to 75 with household income of at least $75,000 or investable assets of $100,000 or more. Of the couples surveyed, 196 already were retired. The survey respondents were not told that Fidelity sponsored the survey.

I would have to say that this is the most surprising result of this survey. Almost half of those married couples who are less than 20 years away from retirement and have a decent amount of wealth, can’t agree on whether or not they will work in their retirement. This isn’t just a financial issue, but it also affects many other aspects of their lives!

The idea of working during retirement can greatly change the way in which you currently save. If you plan to sit around and do nothing in your golden years, then you will probably use every available penny to invest in your future. On the other hand, if you plan to work during that time, then you may not even be compelled to invest up to the IRA contribution limits early on (although, that may still prove to be a huge mistake).

Of course, given all of this confusion when it comes to retirement and marriage, there is no way that we can expect couples to have solid plans for the future. In fact, the results were worse in this category than the others:

Seventy-three percent of the couples surveyed disagreed on whether they have completed a retirement-income plan, and more than half of the couples surveyed disagreed on what their top source of retirement income would be.

This should serve as a wake up call to all couples out there! Apparently, marriage and retirement talks don’t go hand in hand. People are planning on spending the rest of their lives together, but for some reason, they fail to discuss major financial topics that will impact their future.

Marriage, Retirement & Women

Even though more and more women are working and are involved in the family finances, there are still a large number of wives who don’t feel as knowledgeable about their financial situation as their husbands. Consider these numbers:

Only 35% of the wives said they could take on full responsibility for the couple’s retirement finances if needed, versus 72% of the husbands.

While 20% of the husbands described themselves as “investors,” just 5% of the wives did. Instead, they tended to say they were savers or spenders.

I’m sure that out of the 65% of women who do not feel as though they can take over the retirement finances, many of them aren’t married to men who are purposefully keeping this information from them. Even still, this level of comfort and confidence can only be gained through repetition and constant communication. Last year, when I gave my thoughts about marriage on our anniversary, I identified things that I wanted to bring to our marriage and I’m sure that I wasn’t able to do everything. But, I have a responsibility to keep pushing until I get it right!

It will not be easy to break out of the mindset of focusing only on the short-term, and simply assuming that things will “work themselves out” in the long run. However, here are a few things which you can do to solidify both your marriage and retirement.

What You Can Do

Plan A Huge “Retirement” Talk – Take a look at all of these items and anything else that is important to you, then list your goals regarding each topic. Talk these things out until you are on the same page. Of course, this may take more than one session, but since you can’t make any moves until you have concrete goals, you have to keep at it!

Meet With A Financial Advisor – If you need help in developing a plan that will allow you to meet your goal, then enlist the help of an adviser. Be open and honest in establishing your goals, and the motivation for those goals when you meet. Be sure to meet with him together!

Schedule Regular Financial Meetings – Once you have your goals in place, set up regular meetings to check on your progress. My suggestion would be to hold quarterly meetings and make sure that all of your questions are answered.

Review Statements & Documents Together – Whenever you receive a new statement or other important document regarding a retirement account, take time to go over it with your spouse. You can incorporate this into your regular meetings.

As you can see, the answer to this problem is to communicate and work together. There is no magic formula – it will take hard work, diligence, and patience; but then again, so does marriage!

photo by Ambro