Badass vs Dumbass
Master your Financial Kung Fu to be one and not the other.
Go to Sifu’s Notebook for The 12 Myths of Money
Primer: Who are Sifu & Ronin
Episode 26: Ronin vs. The Universe
Ronin: Sifu, I’ve been doing some “research,” and by that I mean I skimmed some finance blogs between doom scrolling and engaging in stupid comment wars with strangers. Apparently, the world is a financial train wreck, and I’m throwing money away by renting this dump I call home. Renting is evil AF, isn’t it boss?
Sifu: Hmmm. Slow your roll, Master Troll. Don’t believe everything you read online, #1. There’s so much misinformation and outright BS out there, it’s hard to see straight if you scroll through it all. When it comes to money, everyone seems to have an opinion, but you know what they say about opinions, right Ronin?
Ronin: What’s that, boss?
Sifu: “Opinions are like assholes – everyone has one.”
Ronin: Hahaha. Fact!
Myth #1: Renting Is Throwing Away Money
Sifu: Renting isn’t throwing away money. It gives flexibility, avoids maintenance costs, and frees you from the financial burden of property taxes and repairs.
Ronin: Hey, you’re right, Sifu! When shit happens, as it always does, such as a leaky faucet or broken fridge, the landlord is fixing it, not moi. Works for me, boss!
Sifu: Totally. Owning a home isn’t always a financial nirvana. There is a time and place for renting, and you’re probably in that phase right now. It can make sense, especially if you’re not planning to settle down.
Myth #2: You Should Always Buy a Home
Ronin: True true. But the blogs say I have to buy a house or I’m basically a financial failure.
Sifu: Not quite, #1. Owning a home isn’t the ultimate financial goal for everyone. It depends on where you live, your career plans, and your lifestyle.
Ronin: But, I also heard that owning your home is an excellent way to get ahead.
Sifu: It’s true that home ownership can be a good thing. Real estate as an asset is hardly a bad idea. Also paying down a mortgage is a commitment that the owner benefits from over time, like an investment.
Ronin: Oh! So I am missing out on a good investment?
Sifu: Well, yes and no. You’re missing out on buying a property and seeing it appreciate over time, but that doesn’t mean you’re left out in the cold. You see, as a financial boss, you can take the money that you would have put toward the home and put that straight into your investments. That way, you’re still investing. In fact, I would say that you have way more control over assets you invest in, outside of a home. Capiche?
Ronin: Hey, great idea. I’m not losing out then!
Sifu: Just one note with this plan. A home mortgage forces you to put money into that “investment”. When you’re investing on your own, no one is forcing you. That means, you must exert true discipline to follow through with this plan. Can you do it, #1?
Ronin: Aye aye, cap. Def can do! I have been doing this, and will double down on this strategy until it does make sense to buy my own place.
Sifu: Damn son, you almost sound like a boss there…
Ronin: Hee-hee. I’m a boss. He said it!
Sifu: Jesus, help me…
Myth #3: Credit Cards Are Pure Evil and You Should Never Use Them
Ronin: Credit cards, though. Voldemort City – am I right, boss?
Sifu: Ronin, credit cards are only evil if you misuse or abuse them. Used correctly, they help build credit, offer rewards, and provide protection. The key is paying off the balance in full every month, on time, without fail.
Ronin: Gotcha, makes sense. Glad I don’t have to chuck mine – without them, my wallet would be empty!
Sifu: Haha, yes. Keep a couple of dubs in there, just in case. Cashless society is not here yet, bro.
Myth #4: Saving for Retirement Can Wait
Ronin: Good tip, boss! Okay, so what about retirement? I’m still young! I’ve got plenty of time to plan for life decades from now.
Sifu: Yes #1, but the earlier you start, the better. Compound interest is your best friend—if you let it work for you.
Ronin: Wait, I thought compound interest was my arch-nemesis.
Sifu: Only if you’re carrying credit card debt. But for investments, it’s the magic key that will transform you into a boss.
Ronin: So, I’ll be Batman, and compound interest will be my trusty sidekick, Robin?
Sifu: Ha! More like Alfred, but yes. However, don’t you forget #1 – I’m always Batman. Maybe you can be Robin…
Myth #5: You Can Always Save Later When You’re Earning More
Ronin: Ok, ok. I’ll just save later when I’m making more money, though. Future me will be filthy rich AF and can handle all that saving business.
Sifu: Future you is probably still waiting on a miracle. The truth is, if you don’t start saving and investing now, I can see lifestyle creep eating up those extra earnings. Start small but start now.
Myth #6: You Can Time the Market
Ronin: Oh! Ok boss – will stop procrastinating. But I can just wait and time the stock market, right? Buy low, sell high. As easy as ABC.
Sifu: Listen up, Nostradamus. If you can predict the future, sure. But no one, not even pros, can time the market consistently. It’s better to invest regularly and stay in for the long term.
Ronin: Sifu, you saying my magic 8 ball won’t work?
Sifu: Only if your ball consistently shows “Don’t Count On It”.
Myth #7: You Don’t Need an Emergency Fund if You Have a Credit Card
Ronin: Doh! I’ve got a credit card. Why would I need an emergency fund?
Sifu: Wow. Because relying on credit cards for emergencies means you’re trading one problem for another—debt. An emergency fund keeps you afloat without sinking you in interest.
Ronin: So, shitty escape plan, huh?
Sifu: Credit cards are no savior. They’re a tool, not a crutch.
Myth #8: You Should Always Max Out Your 401(k) Contributions
Ronin: But what about 401(k)s? I heard I should max it out at every opportunity.
Sifu: Maxing out your 401(k) is great, but only if you’ve already taken care of high-interest debt, built an emergency fund, and have a balanced financial plan. Don’t sacrifice today’s needs for tomorrow’s savings.
Ronin: Roger that, Batman. But once those things are taken care of, I should then max out the 401(k), did I get that right?
Sifu: Mostly right. Everyone assumes that it is the perfect plan. However, it presumes that your tax rate will go down when you retire. What if it doesn’t? What if your FIRE plan works brilliantly, because I believe in you, and it will. When you’re making serious passive income, guess what happens when you go to take funds from that 401(k) – it gets taxed even more than if you just paid the tax on your income today, when your income is not sky high. That’s opposite to what you expected or wanted. Just be careful with this one.
Myth #9: All Debt Is Bad
Ronin: Oh boy – will keep an eye on the numbers. But, what about debt? I keep reading about how bad it is, and everyone says “Don’t Do It”.
Sifu: Well, not all debt is bad. Some debt, like mortgages or student loans, can be investments in your future.
Ronin: So, only debt from credit card is off-limits?
Sifu: Well, especially credit card debt. Also stay the fuck away from payday loans! That’s the most sinister method to separate folks from their money. If you did the math, which no one does, payday loans extort at a rate between 200% and 700%, annually. Pure unadulterated evil. The key is to avoid high-interest debt that doesn’t build value.
The high cost of payday loans is a cruel reminder that easy money often comes with a heavy price.
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Myth #10: The Stock Market Is Like Gambling
Ronin: Yikes! Roger that. Now, the stock market. It’s just a giant Vegas casino, right?
Sifu: Not at all. Investing in the stock market is about long-term growth. If you invest wisely, the stock market offers steady returns over time. Gambling, on the other hand, is about short-term luck, and for you mostly bad luck. I’ve had the unfortunate experience of watching you gamble, boy – it ain’t pretty!
Myth #11: Keeping Cash Is Safer Than Investing
Ronin: Hey, easy big guy – I quit that biz. That was so last decade. But isn’t cash safer than investing? Cash is king, right?
Sifu: Cash loses value over time due to inflation. Investing allows your money to grow and keep pace with inflation. Holding too much cash means you’re losing purchasing power.
Ronin: So, all that cash under my mattress is depreciating faster than my buddy’s new car.
Sifu: Definitely. In this case, cash is more a pauper than a king. Keep some, but not stacks and stacks. You get what I’m laying down, #1?
Myth #12: High Risk Equals High Reward
Ronin: You bet! I heard high risk equals high reward. This has to be true, no?
Sifu: Again, yes and no, #1. High risk can lead to high reward, but it can also lead to high losses. The key is balancing risk with your goals, not betting on every risky venture that comes your way.
Ronin: Ai-yah!
Sifu: Focus on long-term, diversified investments instead of chasing the next big thing.
Ronin: Man! That is long list of money myths, boss. Deciphering between good and bogus information online is not a breeze. It’s like me versus the universe out there. What are the chances of winning this battle?
Sifu: Stick with me, Padawan. Over time, you will learn how to protect yourself and more easily discern between the two. It’s like you’re building armor to protect yourself in battle. But it takes time, Ronin.
Ronin: Ok, Iron Man – we got this!
Sifu: Yes Jarvis, we do.
Sifu’s Notebook
The 12 Myths of Money
Managing personal finances is an essential life skill, but it’s often shrouded in misinformation. From get-rich-quick schemes to misconceptions about saving and investing, it’s easy to fall victim to financial myths. These are the little lies we constantly hear. Heard enough, they become part of you mindset and your beliefs. Here are the top 13 myths about personal finance and the truths that debunk them.
1. Myth: Renting Is Throwing Away Money
Truth: Renting can be a smart financial decision depending on your situation. It offers flexibility and freedom from maintenance costs, property taxes, and other expenses that homeowners must bear. It can also allow you to invest the difference you would have spent on owning.
2. Myth: You Should Always Buy a Home
Truth: Homeownership isn’t for everyone. It depends on your financial situation, lifestyle, and long-term goals. Renting can be a better option for some people.
3. Myth: Credit Cards Are Evil or You Should Never Use Credit Cards
Truth: When used responsibly, credit cards can offer numerous benefits, such as cash back, travel rewards, and consumer protection. The key is to pay off the balance in full each month to avoid interest.
4. Myth: Saving for Retirement Can Wait
Truth: The earlier you start saving for retirement, the better. Thanks to compound interest, even small contributions made in your 20s can grow exponentially over time. Delaying retirement savings can mean needing to contribute much more later to catch up.
5. Myth: You Can Always Save Later When You’re Earning More
Truth: There’s no guarantee you’ll earn more later, and even if you do, lifestyle inflation could prevent you from saving. The best time to start saving is now, regardless of your income level.
6. Myth: You Can Time the Market
Truth: Even professional investors struggle to time the market consistently. A more effective strategy is to invest regularly (dollar-cost averaging) and stay in the market long-term to benefit from overall growth.
7. Myth: You Don’t Need an Emergency Fund if You Have a Credit Card
Truth: Relying on credit for emergencies can lead to a cycle of debt, especially if you can’t pay off the balance immediately. An emergency fund provides a safety net without the risk of high-interest charges.
8. Myth: You Should Always Max Out Your 401(k) Contributions
Truth: While maxing out your 401(k) can be beneficial, it’s not always the best strategy for everyone. Consider factors like your debt situation, emergency savings, and other financial goals before contributing the maximum. *** Canadians: Use RRSP ***
9. Myth: All Debt Is Bad
Truth: Not all debt is created equal. While high-interest consumer debt is harmful, debt used for investments like education, property, or business growth can provide long-term benefits and opportunities.
10. Myth: You Should Avoid Investing in Stocks—It’s Too Risky or The Stock Market is like Gambling
Truth: While stocks can be volatile in the short term, they offer one of the best ways to build wealth over the long term. Diversifying your investments and staying invested through market ups and downs mitigates risk. Unlike gambling, investing in the stock market involves informed decisions, research, and long-term strategies.
11. Myth: Keeping Cash Is Safer Than Investing & Cash is King
Truth: Cash loses value over time due to inflation. While it’s important to have liquid savings for emergencies, investing is necessary to grow your wealth and stay ahead of inflation. Holding too much cash can result in missed opportunities for investment growth.
12. Myth: High risk equals high reward.
Truth: Not all high-risk investments lead to high rewards; they can also lead to significant losses.
