Last week, as I was sharing drinks and conversation with a few of the people from my western line dance class, the instructor mentioned that she valued my ebook on saving money (SAVE Your Money, Your Sanity, and Our Planet: 5 Lessons and 125 Tips for a Thrifty Lifestyle). I was surprised that she knew about it and even more surprised that she’d downloaded it; I generally make no effort to promote it because I focus primarily on my true love, fiction. I wrote my SAVE ebook because I grew up in a modest but well educated household so I am naturally thrifty, and I am continually surprised by the way people think about money and finances; or more accurately, by the way they don’t think.

I understand, believe me. I am not number-oriented and my accountant mother is continually astounded by how dense I can be about arithmetic, but she has managed to educate me somewhat over the years. There are certain comments I hear over and over again that show common misconceptions many Americans have, and those have inspired me to write this blog post.

• Last week on the way to western line dance class, my carpool buddy said something like “I can only make $13,000 a year when I’m collecting social security.” This is wrong in a lot of ways. For 2013, the figure is actually $15,120, and that’s the amount which you can earn without affecting your social security payment. And this rule only applies if you are taking SS payments before your full retirement age. Anything you earn above limit that will reduce your payment, but everything you earn pays into your account for future payments. So you are always better off to earn more money. For a full explanation, see http://www.ssa.gov/retire2/whileworking.htm.

• I often hear people make the following argument for buying a house: “Mortgage interest is tax-deductible.” There are a lot of good arguments for home ownership, but this is not necessarily one of them. A lot of Americans seem to think that you get to deduct all your mortgage interest from your tax bill. Do the math and you’ll soon realize that you are actually deducting only the percentage that matches your tax bracket. In other words, if you’re in a 20% bracket, you can deduct only 20% of your mortgage interest. Which means you’re paying 80% to use the bank’s money. At today’s low interest rates, that might be a good deal if you can make a better return by investing that money elsewhere. But if savings or investment returns are less than your mortgage interest, you’re losing money every month.

• “Rich people (single filers making $400K or more per year) have to pay 39.6% of their income in taxes.” Poor babies. I wouldn’t feel particularly sorry for them even if that were true, but it’s not. Yes, a single person making more than $400K per year for 2013 is said to be “in the 39.6% tax bracket,” but that does not mean they pay 39.6% of their income in taxes. It means they pay 39.6% only on the dollars they have earned in excess of $400K. All Americans pay the same percentages on the same amounts. So all single Americans are paying 10% on earnings up to $8925, 15% on earnings between $8925 and $36,250, 25% on earnings between $36,250 to $87,850, and so forth. Plus, rich people often have investment earnings and other deductions that reduce their overall tax rate. Still feel sorry for them?

That’s more than enough arithmetic for now. Understanding how our tax system really works is a big step toward understanding how to best use your money to create a lifestyle you truly enjoy (that’s really what my little book is about).