6 Tidbits of Financial Advice You Should Ignore

Photo (cc) by Tax Credits

At some point, we’ve all been given financial advice that later left us scratching our heads in disappointment or confusion.

Unfortunately, it’s tough to weed out all the bad information that can be found in books or on the Internet, especially because so many self-proclaimed financial experts abound.

But there is help to figure this out. For instance, CreditCards.com says bad financial advice usually has at least one of the following qualities:

  • Confusing.
  • Comes from someone with a vested interest.
  • Unsolicited.
  • One size fits all.
  • Framed as the only option.
  • Promises quick and easy results.

Here are six common tidbits of financial advice you may want to ignore:

1. Credit cards are evil

Credit cards do not have any inherent qualities, good or bad. It is human behavior that determines whether they are beneficial or problematic.

If you are unable to resist swiping the magic plastic for an extended period of time or if you use it to fund outrageous shopping sprees, your issues go way deeper than a credit card.

Used responsibly, credit cards offer great rewards and eliminate the need to have a wad of cash in tow. They also provide buyer protections. You just need to be disciplined enough to pay off the balance each month.

Besides, you will want to keep one around for travel arrangements and online purchases. For both, they are a better choice than using a debit card, because they offer more protections.

For more on the advantages of plastic, see “10 Hidden Benefits of Credit Cards.”

2. Following a militant spending plan will set you free

Well, not really. What happens to avid dieters who have cravings but continue to suppress the urges until they can’t take it anymore? They give up and resort to comfort foods. Lots of them.

Incorporating mad money into your spending plan is OK. On the other hand, deprivation is not a good idea and will usually backfire.

If you are trying to curb purchases, be realistic. Take small steps and modestly reward yourself from time to time. Also, begin with the end in mind and incorporate plenty of visual reminders so you will focus on the financial goal you are working toward.

Need help getting started? Check out “How to Develop an Effortless Budget You’ll Stick To.”

3. Sign up for life insurance — or else

If you are 25 with no dependents and minimal assets, how much life insurance do you really need? The answer: none.

Money Talks News finance expert Stacy Johnson says:

You need life insurance if those depending on your income would suffer financially from your death. The most obvious example is when you have kids, debt and a one-earner household, because the death of the breadwinner would be financially tragic.

When you’ve paid off the house, the kids are gone, the savings account is topped off, and your death is just an excuse for your remaining friends to get together and have a drink, your need for life insurance is over.

When it is time to buy, do your wallet a favor and go for a term policy.

4. 10 percent is the sweet spot for retirement contributions

Saving 10 percent of your income used to be the standard advice, but not anymore — particularly if you didn’t start setting aside money early in your working years.

If you did not get an early start, you will need to save a higher percentage of your income to reach retirement goals.

For example, people in their 40s who have not saved much for their golden years likely will find that 10 percent is not nearly enough.

How much will you need? Figure out what you will spend on health care, food, shelter and other necessities. Now consider what you will get from Social Security and other sources. Filling in the gap will be your responsibility.

5. You should buy a house because it is a good investment

Were you around for the last housing crisis? Being a homeowner for several years, I can definitely attest to the fact that homes do lose value and do not always appreciate as rapidly as you would like them to.

That does not mean buying a home is a bad idea. One of the beauties of owning a home is that a fixed-rate mortgage locks you into a set cost each month. You will make the same monthly payment for years while the price of rent goes up.

Eventually you will own that home free and clear. That is an investment in your future financial security.

But remember that buying a home is not a surefire path to riches. Take it from me, being underwater — where your outstanding mortgage exceeds the value of your house — is not a pleasant place to be.

6. Home equity loans are a great way to get out of a hole

Under a mountain of credit card debt and looking for a way out? Home equity loans may seem like the perfect solution because of the competitive interest rate.

But if you fall on hard times and default on the loan, everything goes downhill from there. In a worst-case scenario, an inability to pay back the loan could end up with you losing your home.

Have you received other questionable advice that I didn’t mention here? Sound off in our Forums. It’s the place where you can speak your mind, explore topics in-depth, and post questions and get answers.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
This Is the Best Time of Day to Take Blood Pressure Meds
This Is the Best Time of Day to Take Blood Pressure Meds

The right timing can help you prevent a big — and possibly fatal — mistake.

The 10 Best and 10 Worst States for Raising a Family in 2020
The 10 Best and 10 Worst States for Raising a Family in 2020

There are trade-offs no matter where you live. However, some states have big advantages when it comes to choosing a home for your family.

Beware These 5 Common Work-From-Home Scams
Beware These 5 Common Work-From-Home Scams

You can spot scammers and con artists with a little know-how.

7 Gadgets Under $60 That Can Boost Your Health
7 Gadgets Under $60 That Can Boost Your Health

These Amazon finds can help ease foot aches, boost energy and even protect your heart.

7 Reasons Not to Move When You Retire
7 Reasons Not to Move When You Retire

Sunny skies and warm breezes sound great. But in reality, you might be better off retiring closer to home.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
This Gas Station Scam Is Victimizing More Drivers
This Gas Station Scam Is Victimizing More Drivers

For the second straight year, a growing number of Americans believe they’ve fallen prey to this scam.

This Is the Most Popular Age for Claiming Social Security
This Is the Most Popular Age for Claiming Social Security

Both men and women are most likely to start receiving Social Security benefits at this age.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?
Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

You could save more than $30,000 by setting aside these costly expenses for just one year.

6 Things You Should Never Buy at Trader Joe’s
6 Things You Should Never Buy at Trader Joe’s

We love Trader Joe’s for plenty of reasons. But think twice about this handful of products.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

6 Legal Documents Retirees Need — but Don’t Have
6 Legal Documents Retirees Need — but Don’t Have

Few retirees have these documents that are crucial to their golden years — especially during a pandemic.

7 Unusual Ways to Declutter Your Home
7 Unusual Ways to Declutter Your Home

Tired of possessions weighing you down? Here are seven ways to declutter painlessly and effectively.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

9 Dumb Ways You Are Ruining Your Home Value
9 Dumb Ways You Are Ruining Your Home Value

Homeowners, beware these mistakes that can drive away potential buyers.

5 Ways Joe Biden Wants Social Security to Change
5 Ways Joe Biden Wants Social Security to Change

Here’s where Biden — as well as Trump — stands on the future of the Social Security retirement system.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

21 Things You Should Always Buy at a Dollar Store
21 Things You Should Always Buy at a Dollar Store

Dollar stores have great bargains on both everyday and occasional purchases.

10 Things That Really Are Free on Amazon
10 Things That Really Are Free on Amazon

These freebies are available to anyone — no Prime membership necessary.

15 Outrageously Overpriced Products — and How to Save on Them
15 Outrageously Overpriced Products — and How to Save on Them

Retailers mark up products by hundreds of times their cost — but you don’t have to pay the premium.

18 Amazon Purchases That We Are Loving Right Now
18 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.