10/08/2014 07:09 pm ET Updated Dec 08, 2014

5 Money Lies We Tell Ourselves

When trying to make ourselves feel better about our financial situation, we often tell ourselves little lies that ease our minds about things. The problem is, if we tell ourselves these lies enough, we tend to start believing them. A sound financial strategy is to recognize the lies we are telling ourselves and vow to stop lying. Here are the most common financial lies we tell ourselves:

1. If I borrow money from my savings, I'll definitely pay it back.

We all tell ourselves this, but very few of us actually pay ourselves back. The money is there and it's convenient, so we make up an excuse so we can easily access it. The problem is, if you don't have they money to pay for something without the savings, then you probably aren't going to have the money to pay back your savings.

If you need to make a large purchase and don't have the cash on hand, consider applying for a credit card with a 0 percent intro APR. (Here is a good list of those cards.) If you can get a card with at least a year and a half of no interest, then you can pay off the principal balance slowly without being charged interest. Keep in mind, if you don't think you can pay the balance back within the year and a half, don't use this method. Borrowing from savings is better than racking up extra interest from a credit card.

2. I'll start investing next year when things are better.

Investing can be complicated, and so many of us avoid it altogether because we fear what we don't know. We avoid contributing to our 401k because we don't know how or we think it will hurt our lifestyle. Don't shy away from contributing to your 401k, especially if your company matches contributions. That's just throwing money away. Talk to your HR department; they can walk you through how to contribute. And 401k contributions are not taxed, so unless you are contributing a huge amount, you won't notice too much of a difference in your paycheck.

If you want to invest outside your 401k or in an IRA and are really nervous about it, look for companies or investing sites that offer investing education to new investors. Many do-it-yourself sites offer great education and help for free when you set up an account. We looked at the best investing websites for beginners and here are the best ones that we found.

3. I don't need to worry about my credit score until I want to buy a car or a house.

Your credit score affects a lot more than just getting approved for a large loan. It can dictate many other financial needs. Your credit score helps determine what kind of interest rate you are offered on loans. It informs what you will pay for car insurance or other insurance policies. It can keep you from renting an apartment or a rental car. And even if you can get approved for a credit card, a lower score can keep you from getting the best rewards and perks.

If you don't know your credit score, don't sign up for a service that requires you to give your credit card information, like Credit Sesame or Credit Karma. If you need to improve your credit score, here are some quick ways to get your numbers up.

4. I'll need less money when I'm older, so I can live off of Social Security.

In reality, you are probably going to need more money when you get older. Even if you manage to slide into retirement debt-free with a deed to your house, there are a lot of expenses that come along with getting older, the biggest of which being medical expenses. Here are some of the other big unexpected costs people have after retirement:

  • Making major fixes on an old home
  • Helping out children in financial trouble
  • Inflation
  • Higher taxes
  • Living longer than expected

If you don't think you have enough money for your retirement, make sure you are contributing to your 401k, and if need be, set up an IRA to contribute even more to your retirement.

5. I need to win the lottery to get out of this debt.

Debt can be overwhelming for sure. The key is not to panic. Sometimes, it can feel like you need a huge windfall to get out of your current debt, but going the slow and steady route can actually be a smarter game plan than using a lump sum to pay off all your debt at once.

There are a few tricks that can help you tackle your debt head on. Lowering your interest rate on your debt is the most important step. If your credit score is still good, apply for a balance transfer credit card. Many of these cards offer a 0 percent intro APR for balance transfers, meaning you won't be paying any interest on your debt for the intro period, which can last up to a year and half. If you can't get approved for a balance transfer card, look into debt consolidation to help lower your interest rate. The lower your interest rate, the more debt you are paying off each month, and the quicker you can become debt free.

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