Having financial problems can be like having a baby – a lot of people have been through it, and many of them have financial advice to share, whether or not you ask for it. The truth is, while they mean well, most people are not qualified to dole out financial advice, especially when it comes to complex and sometimes very personal issues like credit card debt and major purchases.
We’ve collected a few of the most common “tips” to leave rather than take. If you’re facing a major financial decision, we recommend you seek out professional, expert financial advice – not hearsay from the neighbors. If you need to talk to about debt settlement, don’t hesitate to call us up. We’ve been dealing with debt disasters for more than 20 years and if we can’t help, we can find someone who can.
Student loans are a good investment. Yes, education can be an investment, but signing up for tens of thousands of dollars of debt without considering what the return will be is not setting yourself up to succeed. Before taking on student debt, consider future salary, job market, hiring rate, etc. and evaluate the investment just like you would a stock.
Buy a car based on the affordability of the monthly payment. Thinking about a big purchase, like a car or a house, in terms of monthly payments is important for budgeting, but it can mask the true cost. Salespeople are trained to get you fixated on a monthly number, because it’s easier to swallow. It’s important to always do the math and consider how much the purchase will cost you in the long run – you may find that over time, you’re paying for a Maserati but driving a Dodge Neon.
Don’t rent if you can buy. If you’re reading this, chances are you are a survivor of one of the worst recessions our country has seen, caused by a housing bubble inflated by bad loans. Yes, buying a house can be a great investment, but it all depends on the terms. Don’t blindly buy. If you’re in the market for a house, be sure to consult an expert and understand exactly what you’re getting into.
Fill-in-the-blank stock is a guaranteed winner. There is a myth that you can make a lot of cash quickly by investing in a particular stock or company that’s really hot right now, but over the long haul, it’s not the best way to invest for strategic growth. You should only plan to invest a small portion of your portfolio into individual stock picking if it’s an area of interest for you. Otherwise, the right way to build out a healthy portfolio that will stand the test of time before you retire is to diversify, not put all your eggs in one basket.
Pay off unsecured debt with a home equity loan. When constantly hounded by credit card or medical bill collectors, you might start to think that taking out a home equity loan to pay those debts is an easy way to stop the annoying phone calls. Be warned: this is very dangerous. You run the risk of losing your home.
YOLO. It’s true, you do only live once. But that doesn’t mean you are going to die tomorrow, and assuming you don’t, you still have to eat. We all have to make decisions that weigh today’s pleasures with tomorrow’s, and sometimes that means saying no to a purchase as a gift to your future self.
Always listen to your elders. Yes, we need to respect our parents and those that have more life experience. But the fact is, financial problems know no age – there are people of all generations with bad financial advice to give. Find sources you trust that you can talk through major financial decisions with. Great Uncle Dave may know how to bring a car back from the dead but that doesn’t mean he’s any better than your average Joe at budgeting, no matter how old he is.