Author Topic: Worst Financial Advice (You've heard).  (Read 53558 times)

heybro

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Worst Financial Advice (You've heard).
« on: May 04, 2016, 10:54:45 PM »
What are some of the common things you hear for people to do to save money?  Some of them are so overplayed they drive me nuts.  Mostly, I dislike them because they are so not anywhere near FIRE concepts!

1. Cut Starbucks. 

I hear this all the time.  Cutting out 5 bucks a day can save you thousands!  If your biggest selling point is to tell people to stop spending 5 bucks every day, and this is what they are to base their future life on, then it is like telling someone who wants to go to Harvard that they should 'try to stay out of summer school.'  I am all for not wasting 5 bucks a day on coffee, but the people who use this line, generally have nothing else to say.  If it weren't for all the money wasted on coffee, I think they'd have no financial advice to give.  It's not like they are then asking you to consider giving up your car.

2. Mortgages are good for the interest write off! 

No one who ever owned a home went and mortgaged it so they could get the interest write off.  Why pay the bank 20 grand a year in interest just so you can save $750 from Uncle Sam!

What about you?
« Last Edit: May 04, 2016, 11:13:08 PM by heybro »

Johnez

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Re: Worst Financial Advice (You've heard).
« Reply #1 on: May 05, 2016, 12:37:46 AM »
Ya know, I kind of agree with the Starbucks logic there, but you have to hit the low hanging fruit first. Let's say you work 250 days a year, multiplied by $5. This is actually a lot of money. $1250. Now save that amount of money every year (bumping it up 2% a year for inflation of course) in an index fund returning an average of 7% a year for 30 years. What do you get? $157,000. That's a lot of freaking money. Of course, anyone bringing these numbers to the table has a LOT more to say than "Cut Starbucks," so you're probably right there.

Ok, had to get that out of the way.

How about this: save your money. The compound interest fairies will grow it if you put it all in the magical bank box. Ok, maybe one could actually earn interest from a bank in the old days, but *saving* money doesn't actually make it grow. INVESTING it does. The most profound idea that totally changed my view of money was this-your money can work harder than you. Put those $10 bills to work! They work 24/7/365. Having them sit around COSTS you money. Spending them frivolously costs your future. Investing money isn't spending it-it is purchasing your future, time, freedom.

Primm

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Re: Worst Financial Advice (You've heard).
« Reply #2 on: May 05, 2016, 12:52:25 AM »
In person, from a "financial adviser" employed by my former bank.

Context - I'd just split up from my ex and we'd divided the assets, leaving me with a whopping great $20k to "invest". I was young, stupid, stressed, and had two small children.

He ran me through the various investment vehicles available in the bank, and then came out with this pearler when I even suggested that I might need the money down the track. You know, for retirement or something. Bear in mind he was about 5 years younger than me.

"Don't get too hung up on your retirement. That's what superannuation is for. Anyway, you're still young enough that you'll probably meet somebody else and you won't have to worry about the money side of things".

That was in 2003. 13 years ago and I still remember the look on his face when my jaw dropped and I walked out without saying another word. I knew nothing about money, but I knew that was wrong. So very wrong.

Actually with the benefit of hindsight, do you think that may have been a seriously dodgy attempt at a pickup line? I've never pondered that before...

ooeei

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Re: Worst Financial Advice (You've heard).
« Reply #3 on: May 05, 2016, 06:19:42 AM »
Renting is just throwing your money away, buy a house!

MandyM

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Re: Worst Financial Advice (You've heard).
« Reply #4 on: May 05, 2016, 06:41:11 AM »
Renting is just throwing your money away, buy a house!

+1. I have been a homeowner since I was 22 and currently have two (one is a rental). I actively talk people out of buying a house all of the time because they have terrible reasons for wanting one. This is usually one of those terrible reasons.

Anyway, you're still young enough that you'll probably meet somebody else and you won't have to worry about the money side of things".

This made me cringe. I'm so glad you just got up and walked out, that was the perfect response. And I don't think he was hitting on you, he was just being shitty without even realizing it.

boarder42

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Re: Worst Financial Advice (You've heard).
« Reply #5 on: May 05, 2016, 07:01:45 AM »
people who drink starbucks daily have a lot of other bad financial decisions in their life typically. so cutting a daily outsourcing of coffee is a very good first step towards saving more for retirement even if it is only 1250 a year plus the amount of time you spend waiting on your coffee.  small steps towards greater independence. 

in terms of WORST financial advice - stop buying coffee from an over priced store daily is very very far from it.

« Last Edit: May 05, 2016, 07:37:30 AM by boarder42 »

Dezrah

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Re: Worst Financial Advice (You've heard).
« Reply #6 on: May 05, 2016, 07:06:49 AM »
Anyway, you're still young enough that you'll probably meet somebody else and you won't have to worry about the money side of things".

That was in 2003. 13 years ago and I still remember the look on his face when my jaw dropped and I walked out without saying another word. I knew nothing about money, but I knew that was wrong. So very wrong.


Why would you leave?  He was just implying you were a fine piece-of-ass who could easily get a sugar daddy if you needed to.  Who would want to worry their pretty head about money when gold digging is so easy?

Seriously though, you're response was absolutely perfect.  What was that look on his face?  Was he ashamed?  Indignant?  Confused?

nereo

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Re: Worst Financial Advice (You've heard).
« Reply #7 on: May 05, 2016, 07:12:19 AM »
The worst financial advice I've heard (repeated through many different sources) is that you shouldn't try to save in your teens and twenties.  The more rational of the arguments for this is that your best earning years are in front of you and whatever you could save will be a fraction of what you can save in your 40s and 50s. The more dubious arguments focus on the whole "YOLO" concept.  My two best counters are that compounding works wonders when given time and overspending now leads to a lifelong pattern of overspending.


1. Cut Starbucks. 

2. Mortgages are good for the interest write off! 

I'll take issue with both of these.  I'm certainly sick of hearing about the 'latte factor' in the mainstream media, but I'd hardly consider this to be "the worst financial advice."  It does address a key component that so many Americans overlook; small routine purchases (or weekly/monthly subscriptions) add up to a crap-ton of money over just a few years.

Regarding the mortgages: I've known several people (including my parents) who have chosen to refinance and extend their mortgages, in part because of the mortgage write off (combined with the absurdly low interest rates). I will do the same thing if rates are <4% when I come close to paying off my mortgage.
If you are buying a house just FOR the interest write off - well yes, that's a bit silly.  It should, however, be a factor in your home-purchasing decision.

AmandaS1989

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Re: Worst Financial Advice (You've heard).
« Reply #8 on: May 05, 2016, 07:16:19 AM »
Worst I've heard is 'You're always going to have debt so why worry about paying it off?' Oh my God I just want to scream and gnash my teeth in anger when I hear that.

Orvell

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Re: Worst Financial Advice (You've heard).
« Reply #9 on: May 05, 2016, 07:30:49 AM »
"If you buy a house it should be a 'stretch' because your salary will probably rise over the years. Worst thing you could do is end up with a house that's too small when could have bought more than just a starter house."

JZinCO

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Re: Worst Financial Advice (You've heard).
« Reply #10 on: May 05, 2016, 07:31:09 AM »
I'm pretty sure I weekly get coworkers, bosses, etc telling me to buy a house.

"Buy a house. It's a best thing to do to grow your wealth."
"Better get in now before houses get too unaffordable."
"Just buy it, wait a few years, sell it and buy a better house. You can't lose."
"My house value keeps beating stocks. You need to take money out of your crappy 401K and buy a house."
"You're almost 30 and you don't own a house?! It's time to be an adult."
"My advisor has a phd in economics and told me to sell everything and buy a house. You think YOU'RE smarter than an economist?!"
"2008 is over. Policies have been fixed and housing is a safe return again."

I also work in a university.. in the hard sciences...sigh. I try to say that I have no reason to expect anything other mean returns on real estate or stocks but they also resort to something along the lines of why our local RE market is special. I can usually defuse the situation by saying "I prefer cash flow" because I know that, since all their money is going to PITI, they can understand. They still pity me as uneducated though which is the worst.
« Last Edit: May 05, 2016, 07:36:16 AM by JZinCO »

Frankies Girl

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Re: Worst Financial Advice (You've heard).
« Reply #11 on: May 05, 2016, 07:39:35 AM »
UBS guy when I told him I was taking over my accounts and self-managing from then on: "I would never advise a layman to manage their own accounts; that's like someone that is not a doctor trying to perform surgery on themselves" and then going on to imply that I was just a silly woman and incapable of learning the complex and challenging mysteries of investing.

And he also repeatedly tried to get me to invest more money with him. The hard sell started ramping up within a few weeks of taking over accounts left to me by my father. So he was pressuring me (very hard sell about how he was a genius and would make me way more money than any of the other investment houses out there) to make huge money decisions right after a major life change/death in the family.

Total asshat. I reported him to the company about his hard sell tactics when I closed out and moved my account.



And I have never been able to write off a dime of mortgage interest, but then my house is a very small and not expensive one.

But I do agree that people that do the coffee thing are usually the same ones that have tons of bad money habits that they need to become aware of; that's the point of saying "cut out the Starbucks" it's a reframing/reminder of all the "little" stuff those spendy folks blow through every week without even thinking. Like car washes, lunch runs, mani/pedi, blowouts... stuff they forget about because it's so commonplace to them and they think of them as needs instead of wants.


VaCPA

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Re: Worst Financial Advice (You've heard).
« Reply #12 on: May 05, 2016, 07:48:39 AM »
I'm pretty sure I weekly get coworkers, bosses, etc telling me to buy a house.

"Buy a house. It's a best thing to do to grow your wealth."

The sad part is this is somewhat true for a lot of Americans. It typically doesn't apply to people who go on financial/investing msg boards, but a lot of people are TERRIBLE at investing. Like got scared and sold in 2009 because the market tanked and didn't buy again until things looks rosy years later. One thing a house does force you to do is buy & hold(unless you're foreclosed on which admittedly does happen). I think the key is buying well within means, and only buying when you're staying put for awhile. For a lot of people just doing that is a better wealth building tool than trying to invest in the stock market or mutual funds.

Platypuses

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Re: Worst Financial Advice (You've heard).
« Reply #13 on: May 05, 2016, 07:49:24 AM »
"I financed this 65" TV so I could rebuild my credit score"

Miskatonic

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Re: Worst Financial Advice (You've heard).
« Reply #14 on: May 05, 2016, 07:50:13 AM »
"If you align your chakras, money will start flowing in. The universe provides."

Read that on a blog I stumbled onto the other day. All you have to do is stop stressing about money, meditate to align your chakras, and your money problems will disappear. Face, meet palm.

matchewed

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Re: Worst Financial Advice (You've heard).
« Reply #15 on: May 05, 2016, 07:57:15 AM »
"If you align your chakras, money will start flowing in. The universe provides."

Read that on a blog I stumbled onto the other day. All you have to do is stop stressing about money, meditate to align your chakras, and your money problems will disappear. Face, meet palm.

Pretty much similar to this but wrapped up in a little different packaging.

*cough The Secret cough*

Fishindude

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Re: Worst Financial Advice (You've heard).
« Reply #16 on: May 05, 2016, 08:02:37 AM »
A friend told me .... "I figure you're always going to have a car loan, if you want to have a decent vehicle".
He's 55+ years old and still thinks that way.

JZinCO

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Re: Worst Financial Advice (You've heard).
« Reply #17 on: May 05, 2016, 08:06:41 AM »
I'm pretty sure I weekly get coworkers, bosses, etc telling me to buy a house.

"Buy a house. It's a best thing to do to grow your wealth."

The sad part is this is somewhat true for a lot of Americans. It typically doesn't apply to people who go on financial/investing msg boards, but a lot of people are TERRIBLE at investing. Like got scared and sold in 2009 because the market tanked and didn't buy again until things looks rosy years later. One thing a house does force you to do is buy & hold(unless you're foreclosed on which admittedly does happen). I think the key is buying well within means, and only buying when you're staying put for awhile. For a lot of people just doing that is a better wealth building tool than trying to invest in the stock market or mutual funds.
The frustrating part is the sincerity with which I am told it is the BEST way.
As in, sell everything and buy a house because there is no more optimal way to grow wealth than home ownership.
Essentially I have been told numerous times that it was a good idea to speculate on rising home prices. I know real estate is not the most efficient marketplace, but to a degree, wouldn't future home price growth be somewhat priced into current home prices already anyway? According to zillow, sellers are favored to buyers by a spread of 32 to 1.

sonjak

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Re: Worst Financial Advice (You've heard).
« Reply #18 on: May 05, 2016, 08:21:14 AM »
"If you align your chakras, money will start flowing in. The universe provides."

Read that on a blog I stumbled onto the other day. All you have to do is stop stressing about money, meditate to align your chakras, and your money problems will disappear. Face, meet palm.
This is how my sister is.  She has said "we don't make enough to have a budget" and really she believes that if she makes and sticks to a budget, she's focusing on lack of abundance which will just shut her off from all the abundance the universe has to give her.  So they are living on the edge, spending way too much on crystals and energy work "to remove blocks that are preventing the money from flowing" instead of getting a job or spending less on non-essentials.

It's frustrating but also sad for me because she is a genuinely good person and it feels like watching someone you love bang their head on the wall and complain about the pain but not listening when you tell them to just take a couple steps back so they can't reach the wall.

ketchup

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Re: Worst Financial Advice (You've heard).
« Reply #19 on: May 05, 2016, 08:34:48 AM »
The brand of "financial advice" that focuses on "deals" can drive me insane.  No, you're not "saving" money.  That's not how the Force works!

A manager where I work still thinks his 2014 Dodge Challenger Fancypants Big Penis Edition is going to be worth what he paid for it (new) when it's 10 years old.

Various flavors of "Buy a house no matter what." are indeed quite alarming.  My parents got divorced three years ago; they sold their house, and afterwards my mom bought a small house and my dad is renting a place.  My coworker said "He's renting!?  That's not very frugal!"   ....He's in his late 50s, self-employed part-time doing work he loves, isn't sure if he's going to remain in the area after his daughter finishes high school, could retire today, has a seven-figure net worth, and essentially doesn't spend any money.  But no, renting means he's not being frugal.

"Pregnant? Better buy an SUV soon!"  I wish I was making that up.

forummm

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Re: Worst Financial Advice (You've heard).
« Reply #20 on: May 05, 2016, 08:44:48 AM »
If you give to XYZ ministry, God will bless you and return the gift many fold.

Warlord1986

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Re: Worst Financial Advice (You've heard).
« Reply #21 on: May 05, 2016, 08:46:49 AM »
"You bought the car? You should have leased it."

Spoken to me by a friend's husband. They are in debt up to their eyeballs.

"God wants you to give me money."

Television Evangelist. Otherwise known as modern money lenders in the temple.

trashmanz

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Re: Worst Financial Advice (You've heard).
« Reply #22 on: May 05, 2016, 08:51:36 AM »
"I financed this 65" TV so I could rebuild my credit score"

At 0% interest then that is ok

little_brown_dog

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Re: Worst Financial Advice (You've heard).
« Reply #23 on: May 05, 2016, 09:17:11 AM »
"I like leasing cars because then you get to pick a new one every couple years..."

"You don't need to worry about paying off student loans, everyone has them"

(When discussing finances and the basic must do tasks like keeping an efund, eliminating debt, and saving for retirement) -
"That's unrealistic for most people except the really wealthy, no one can follow that advice"

All spoken by upper middle class people with college educations, good incomes, and plenty of money to spend on vacations, expensive food, and other luxuries...
« Last Edit: May 05, 2016, 09:19:46 AM by little_brown_dog »

AmandaS1989

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Re: Worst Financial Advice (You've heard).
« Reply #24 on: May 05, 2016, 09:18:25 AM »
I hear the student loan one all the time. I just want to punch people when they say it.

Zikoris

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Re: Worst Financial Advice (You've heard).
« Reply #25 on: May 05, 2016, 09:30:31 AM »
Many years ago I had a coworker telling me I should switch from using credit cards to a bank line of credit. His reasoning: It's "easier" because you can just keep using your debit card, and when your checking account hits $0 (!!!) it just automatically switches to your LOC. So you don't get your card declined, or have to monitor your account balance (!!!). Also, lower interest rates.

I wasn't even Mustachian at the time, but I was in awe at the insanity. I think I mumbled something about not paying interest to begin with, and stopping spending if you have no money in your account. But wow.

JZinCO

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Re: Worst Financial Advice (You've heard).
« Reply #26 on: May 05, 2016, 09:41:30 AM »
Many years ago I had a coworker telling me I should switch from using credit cards to a bank line of credit. His reasoning: It's "easier" because you can just keep using your debit card, and when your checking account hits $0 (!!!) it just automatically switches to your LOC. So you don't get your card declined, or have to monitor your account balance (!!!). Also, lower interest rates.

I wasn't even Mustachian at the time, but I was in awe at the insanity. I think I mumbled something about not paying interest to begin with, and stopping spending if you have no money in your account. But wow.
Sounds like CW should have listened to this financial advice from SNL 'Don't spend money you don't have.':http://www.nbc.com/saturday-night-live/video/dont-buy-stuff/n12020

jorjor

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Re: Worst Financial Advice (You've heard).
« Reply #27 on: May 05, 2016, 09:46:23 AM »
"If You Have Savings In Your 20s, You're Doing Something Wrong"

RonMcCord

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Re: Worst Financial Advice (You've heard).
« Reply #28 on: May 05, 2016, 10:34:43 AM »
I was complaining I couldn't afford to rent my own apartment and someone told me I should take out a loan from the bank to pay for the rent. 

opnfld

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Re: Worst Financial Advice (You've heard).
« Reply #29 on: May 05, 2016, 10:44:41 AM »
"You can always make more money."  - as justification for spending.

and

"Stop making credit card payments" - in anticipation of economic collapse at the depth of the financial crisis.

Silrossi46

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Re: Worst Financial Advice (You've heard).
« Reply #30 on: May 05, 2016, 11:14:00 AM »
" I don't have the money to buy my daughter a brand new car so i'm borrowing it from my annuity at work"   "My HR department told me this was the best way to go"

Justification=   I bought my son a new car and it wouldn't be fair if i didn't buy her one as well.   It's my money in the annuity anyways.   

Spoken by a 60 year old with a 294,000 dollar mortgage with 28 years remaining on a 310,000 home that was refinanced 12 times to finance other silly purchases.    0 money saved and retirement not even in the realm of possibilities any time soon.

Daisyedwards800

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Re: Worst Financial Advice (You've heard).
« Reply #31 on: May 05, 2016, 11:18:19 AM »
1. Cut Starbucks. 

As far as the Starbucks advice, "The Latte Factor", this advice actually sort of helped me get started.  I read a book by David Bach called The Automatic Millionaire and his chart of the compound interest from age 22 on changed my perspective.  And he coined the latte factor right?

Secondly, interestingly, sometimes you get very good advice coupled with very bad advice.  For example, the ideas in Rich Dad, Poor Dad about not depending only on your wage income for wealth are really quite genius.  His methods are bad (leveraging yourself with too much risk, real estate etc.), but overall the idea of generating passive income made a huge impression on me.  It is nice to be able to distinguish the bad advice from the good.

GuitarStv

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Re: Worst Financial Advice (You've heard).
« Reply #32 on: May 05, 2016, 11:30:22 AM »
You've had a kid now!  You need a minivan/SUV/aircraft carrier/death star because the ridiculously sized stroller/huge amount of children's stuff/kid's car seat will never fit in your Corolla.

For vacations my Dad, Mom, sister, dog and I all managed to do 13 hr drives in a Ford Tempo when I was a kid.  My wife and I have somehow managed with our (more spacious than a Tempo) '05 Corolla, single child, and dog.  :P

Cycling Stache

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Re: Worst Financial Advice (You've heard).
« Reply #33 on: May 05, 2016, 11:31:17 AM »
YOLO. 

As applied to money, it's often a disastrously bad idea and encourages every kind of splurge purchase.

frugaliknowit

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Re: Worst Financial Advice (You've heard).
« Reply #34 on: May 05, 2016, 11:59:28 AM »
1.  Late 2014:  Buy oil stocks.  They are cheap and will recover smartly.

2.  Leasing a vehicle frees up capital to invest more (LOL!).

« Last Edit: May 05, 2016, 02:28:40 PM by frugaliknowit »

mozar

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Re: Worst Financial Advice (You've heard).
« Reply #35 on: May 05, 2016, 12:27:57 PM »
I've heard a lot of bad financial advice over my lifetime and its kind of depressing to think about. But a couple of gems stick out:
2007: You need to buy a house mozar! Prices will always go up (I was in grad school with 100k in student loans at this time)
2013: You are crazy for buying a house mozar! Prices will never recover! Yeah, my house has appreciated almost 20% in 2.5 years. Still laughing all the way to the bank on that one.

Regarding saving vs investing, I think that's really hard for people to grasp. If you ask someone what's more likely, that you always have a job, or that companies will keep innovating? Most people think its the former, where it's really the latter.

cchrissyy

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Re: Worst Financial Advice (You've heard).
« Reply #36 on: May 05, 2016, 12:30:28 PM »
I was once test-driving a car with an obnoxious salesman.  He wanted to talk about their financing offer, nothing special, maybe it was 5%?  anyway, I tried to shut him up about that by saying even if I did decide to buy, I would pay cash.   

Then he told me it was smarter to keep my cash because getting the loan would guarantee I'd make 5%.  Wait what?!

lightmyfire

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Re: Worst Financial Advice (You've heard).
« Reply #37 on: May 05, 2016, 12:37:50 PM »
"Mortgages and student loans are GOOD debt."

BBub

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Re: Worst Financial Advice (You've heard).
« Reply #38 on: May 05, 2016, 12:47:19 PM »
'Outsource all tasks that cost less than your hourly wages'

AZDude

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Re: Worst Financial Advice (You've heard).
« Reply #39 on: May 05, 2016, 12:55:47 PM »
Not really advice, but stories of how people justified terrible decisions:

"I got an ARM because it was the only way to afford the payments on his house"

"I got a good, not great interest rate on this(refers to new SUV), its only 12%"

"I took out a 401(k) loan to put a down payment on a new house across the street from where I live now. Its much bigger, so we will have more room. I can't sell the old house because it is underwater, so I'm going to rent it out..."



whiskeystache89

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Re: Worst Financial Advice (You've heard).
« Reply #40 on: May 05, 2016, 01:01:49 PM »
Someone to our new hire: "I put my retirement in different sectors. Some in oil and gas some in biotech"

We have access to Vanguard Institutional index funds...fortunately emailed her Jcollins stock series and it helped her out.

From friend: "don't invest because we are in the final crisis of capitalism because ROBOTS"
« Last Edit: May 05, 2016, 01:03:30 PM by whiskeystache89 »

neo von retorch

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Re: Worst Financial Advice (You've heard).
« Reply #41 on: May 05, 2016, 01:03:01 PM »
My Brother: "It doesn't matter how much we put on credit cards because we're going to make a ton of money after college!"

Couple I Know: "There's no point in trying to save up enough to retire early because you never know when some kind of disaster will just eat up all your money."

Several People: "I invested before a big crash and lost a ton of money (multiple times!). Now I won't touch investments!"

boarder42

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Re: Worst Financial Advice (You've heard).
« Reply #42 on: May 05, 2016, 01:04:14 PM »
"Mortgages and student loans are GOOD debt."

now its a good quote.

cats

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Re: Worst Financial Advice (You've heard).
« Reply #43 on: May 05, 2016, 01:12:36 PM »
"Don't worry about saving money now because you'll be earning a high salary later"

some version of this popped up routinely when I was in grad school.  It was true to a degree, but was often the thinking behind some stupid decisions (e.g. taking out loans and eating out regularly or renting an excessively nice apartment).  I thought it was kind of silly b/c grad school is one time in your life when you can get away with being really cheap and it's not considered particularly weird.  Also, most of us were likely to head off into post-docs that didn't pay all *that* much more than our stipend.

Frugal D

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Re: Worst Financial Advice (You've heard).
« Reply #44 on: May 05, 2016, 01:19:57 PM »
"Mortgages and student loans are GOOD debt."

Haha. +1

Also, "you can worry about saving for retirement when you get older."

Ramblin' Ma'am

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Re: Worst Financial Advice (You've heard).
« Reply #45 on: May 05, 2016, 01:26:13 PM »
"Credit card debt is good because it helps your credit score."

boarder42

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Re: Worst Financial Advice (You've heard).
« Reply #46 on: May 05, 2016, 01:37:22 PM »
"Mortgages and student loans are GOOD debt."

Haha. +1

Also, "you can worry about saving for retirement when you get older."

mortgages are good debt.

if you're going to own a house and you have both choices of paying in cash or taking out a mortgage and investing the cash at today's interest rates in the US you both
1. speed up your time to FIRE
AND
2. increase your success rate in retirement
« Last Edit: May 05, 2016, 01:44:58 PM by boarder42 »

rvg

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Re: Worst Financial Advice (You've heard).
« Reply #47 on: May 05, 2016, 01:59:56 PM »
I was once test-driving a car with an obnoxious salesman.  He wanted to talk about their financing offer, nothing special, maybe it was 5%?  anyway, I tried to shut him up about that by saying even if I did decide to buy, I would pay cash.   

Then he told me it was smarter to keep my cash because getting the loan would guarantee I'd make 5%.  Wait what?!

My mother went on a couple test drives and was told "Invest your down payment and lease the car instead, you'll earn 7% on your down payment!" by a sales manager.

galliver

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Re: Worst Financial Advice (You've heard).
« Reply #48 on: May 05, 2016, 02:09:47 PM »
Never actually had this directed at me, but I know too many HS/college students hear "never, ever, EVER get a credit card!" instead of "never, ever, EVER carry a balance on a credit card." I respectfully disagree with Dave Ramsey in that the credit score game is here to stay, so you might as well learn (and teach your children) to win it.

Also not directed at me but I see/hear it: "You should move out of your parents' house because you're [age]." With the optional addendum "I've been on my own since [age] and it made me who I am today!" Plenty of families around the world make multi-generational homes work in a respectful way. Do what's right for your situation--financially and emotionally.

This one I think I did hear but disregarded: "Go to the best/most prestigious school you can get into." While I think it can totally make sense to bend over backward to attend a truly elite institution (e.g. Ivy, MIT), particularly when the price premium isn't extremely large (say, $5k/year, maybe $10k, but not $50k), I do believe below that point the rankings break down in utility and the education and name recognition you'd get from a given institution is mostly the same as the next one on the list. Once you get below that super-prestige level, it's time to consider value. On the flip side of this, some of the best advice I got was to not evaluate the cost of attending a particular school until after fin aid offers came back. The state school was NOT the cheapest for me (I got a merit scholarship elsewhere) so it saddens me when parents seem to be discouraging their kids from even *applying* elsewhere; maybe it's not common but you could be missing out on a good deal.

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Re: Worst Financial Advice (You've heard).
« Reply #49 on: May 05, 2016, 02:10:20 PM »
What are some of the common things you hear for people to do to save money?  Some of them are so overplayed they drive me nuts.  Mostly, I dislike them because they are so not anywhere near FIRE concepts!

1. Cut Starbucks. 

I hear this all the time.  Cutting out 5 bucks a day can save you thousands!  If your biggest selling point is to tell people to stop spending 5 bucks every day, and this is what they are to base their future life on, then it is like telling someone who wants to go to Harvard that they should 'try to stay out of summer school.'  I am all for not wasting 5 bucks a day on coffee, but the people who use this line, generally have nothing else to say.  If it weren't for all the money wasted on coffee, I think they'd have no financial advice to give.  It's not like they are then asking you to consider giving up your car.
I beg to differ. The point of this exercise is to show that small changes add up to big differences over time. Of course, big changes add up even faster, but for someone who has a whole slew of entrenched bad habits, it can be easier to pick just one small one at first. Cascading results can produce positive feedback to encourage greater change down the line.

Quote
2. Mortgages are good for the interest write off! 

No one who ever owned a home went and mortgaged it so they could get the interest write off.  Why pay the bank 20 grand a year in interest just so you can save $750 from Uncle Sam!

What about you?
Yeah, I have a friend who lives just 2 blocks away in a huge, beautiful house for that very reason. I wish I'd known him when he was buying.