2021 Money Myths Busted In Caledonia

2021 Money Myths Busted In Caledonia

Posted on June 4, 2021

We’re not only interested in you as a potential auto loan customer, we are also very interested in people in general. We want you all to be happy, be content with your finances and to avoid getting too far into debt. As part of that, our Caledonia auto loan team has collated 5 common money myths to help you live a better life.

1.   Only the wealthy can save money

Not true. This is a money myth we come across a lot. We are often recommending people save for an auto loan down payment but often come across this answer.

The real truth is that anyone can save. Even if it’s $30-50 a month, over time it will build up and be enough to cover any emergencies or even be used as a down payment.

If you have savings, you don’t have to use a credit card or payday loan for emergencies. This alone can keep you out of debt, which is why we are so hot on savings.

2.   Payday loans help improve your credit score

Not true. As we mentioned payday loans, let’s cover them next. Not all payday loans report your payments to the credit bureaus. Some will but those can be rare to find.

We recommend avoiding payday loans if at all possible. Rates are high, fees can be equally high and terms can be harsh. If you can avoid using payday loans, do so.

3.   Credit cards are expensive and evil

Not true. Credit cards are an expensive way to borrow but if you use them responsibly, their benefits outweigh their costs.

Credit card interest is high but if you spend wisely and pay off the balance each month, you’ll hardly pay interest at all.

You can even use balance transfer cards or 0% cards to help pay down debt faster so they can be very useful indeed. We often recommend using a credit card to help you rebuild credit.

Plus, they can be very useful for emergencies and for helping you rebuild credit so they are certainly not evil!

4.   You can only save for one thing at a time

Mostly untrue. Have you ever heard of savings buckets? This is a relatively new term for managing multiple savings. Some accounts offer virtual buckets where you can allocate some savings for one purpose and some more for another.

For example, if you were saving for a down payment on an auto loan and for college, you could split your monthly savings in two, one in each bucket.

Other accounts that don’t have buckets can be tracked using a spreadsheet using the same principle. You just need to manage the amounts yourself.

5.   Having no debt should mean I have excellent credit

Not true. We hear this constantly, which is why we mention it so often. Your credit score is a reflection of how you handle credit. It’s a score made up of how much credit you have, whether you pay your credit on time and the types of credit you have.

If you don’t use credit, how are the bureaus going to know how you handle it?

When you’re ready for a car lease or loan, get in touch with the Caledonia auto loan experts at Northway Ford for great deals on auto finance.

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