Photo: tr67 on flickr
Consumers are constantly getting bombarded by money advice: Buy this, not that! Use these cards, not those!We tapped a couple finance experts and asked our readers to share the worst money advice they’ve ever received, and boy, have they heard some doozies.
Sometimes it was legit, but most of the time, you could leave it to the dogs.
Read on to learn why it pays to think for yourself.
Brenda Della Casa, a managing editor at the U.K. wedding site, I Am Staggered, has heard a few friends offer this 'advice.'
'It seems to give people a level of comfort that others can survive, but the reality is that people are not surviving in debt,' says Flexo, a consumer finance expert at Consumerism Commentary. 'You can lose your house, lose your possessions, and you shouldn't think just because someone appears to be surviving that it's going to be possible for you to do that.'
If you have the opportunity to stay out of debt, take it.
After landing a new job in law, Krissy Pomerantz was overwhelmed. Should she buy her own place or start paying her loans?
'When people get a raise and they've managed to live comfortably on what they earn that there's no reason to upgrade their lifestyle,' Flexo says.
What's more, Toby Johnston, a CPA and CFP with Mohler, Nixon and Williams in San Francisco, Calif., says having this kind of mindset can keep you trapped in a paycheck-to-paycheck cycle that eventually leads to debt.
'I think people in general have a tendency to increase our standard of living as our income increases,' he recently told BI's Your Money. 'But if we spend exactly in proportion with our income rising, then we'll still wind up with the status quo.'
Family friends nudged Flexo about this when he graduated college, but in hindsight he's glad he ignored them.
Like the millennials getting crushed by student loan debt right now, Flexo says that if he'd borrowed to buy or rent his own place, 'I would have put myself in a worse financial place than I already was.'
Following this suggestion from one BI writer's mother would have been a one-way ticket into indentured servitude.
'You're basically turning a portion of your paycheck to your lender,' says Flexo, and 'since you have to pay them first, you're not able to live your life with the money you make because it's obligated to someone else.'
The longer you extend those monthly payments, 'you'll never be financially free,' he warns. Always pay more to get out of debt quickly.
'It always makes sense to review your bills and not just accept what a company is charging you, whether it's in the initial stage or getting a service, or getting the bills after the fact,' says Flexo. 'Any time when you get a bill and it doesn't match exactly what you expect it to be, you need to take care of your financial situation and the only way to do that is to be aware of what you're paying and why.'
Negotiating is also powerful, adds Andrew Schrage, a personal finance expert at MoneyCrashers.com.
'Whether it's with a street vendor or cell phone service provider, it's one of the best ways to save on spending every month,' he says.
Saving 20% on 'this purchase today' might sound like a good idea around the holidays, but you'll forget all about it once you see your credit score, says Flexo.
'Credit card companies count on these people messing up and paying large interest,' he says, 'and they're counting on a lot of people not paying them back. Add in the fact that these issuers often 'forget' to send statements and you can easily rack up interest and late charges.'
Read more about the pitfalls of using store credit cards during the holidays on BI's Your Money.
Justine Rivero, a credit counselor at CreditKarma.com, hears this frequently.
'Your credit score can also impact you in number of other ways, such as if you are being interviewed for a job, renting an apartment, renting a car, and even getting a cell phone service plan,' she says.
'Also, while you may not be applying for a credit card or loan at this moment in time, you may consider it in a few months or years,' she says. 'You'll need to stay on top of your credit score for the time being so you can be prepared with excellent credit when the time comes for you to apply for a financial product.'
Those glamorous TV shows make it look so easy, says Chris Skiles, an associate art director at Seattle Metropolitan whose friends have insisted he try this, but successful investors never tell you how much it really costs.
You literally have to spend all day researching materials and finding the right contractors, says Flexo.
And 'saying housing is the best investment possible since the market will always go up in value over the long term is clearly not true as illustrated by the recent downturn,' notes Schrage. 'This mentality has caused a lot of people to lose their shirt in the housing market'--even the experts.
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