By Len Penzo
It’s been said that if the palm of your right hand itches, you’ll soon be coming into money. On the other hand (pun intended), it’s also been said that if your left palm itches you’ll soon be paying out money.
Don’t laugh. There are folks out there who actually believe that.
What is funny, though, is if you do an Internet search, you’ll find no consensus at all regarding which palm is which. Some sites proclaim it’s actually vice versa.
Of course, I’d expect such confusion emanating from what’s nothing more than an old wives’ tale. A surprisingly large number of other “financial rules of thumb” are actually nothing more than gussied-up old wives’ tales too…
1. Red cars are more expensive to insure.
You may also believe: If three people are photographed together, the one in the middle will die first.
Reality check: How much you pay for your insurance has absolutely nothing to do with the color of your car. It depends on the car you drive, your age, and your driving record.
2. Buying a home is always better than renting.
You may also believe: It’s bad luck to leave shoes upside down.
Reality check: During the last real estate run-up, this mantra was repeated ad nauseum. The truth is, sometimes paying rent may make a lot of sense. In exchange for that rent, you get a place to live without the commitment and costs that come with owning a home. For a lot of people, the added responsibility is more hassle than it’s worth.
3. Avoid adjustable-rate mortgages like the plague.
You may also believe: If you swallow a watermelon seed, a watermelon will grow in your stomach.
Reality check: If you’re absolutely positive you’ll only live in your house for a short time, an adjustable-rate mortgage (ARM) may save you money – even when rates are rising. This is especially true for hybrid ARMs, where the loan’s interest rate may remain fixed for, say, three or five years before readjusting.