What’s The Worst Piece Of Financial Advice That You Ever Got?

Financial information can be found all over the place from sites like CNN Money to television personalities like Suze Orman and Dave Ramsey. This information is often so generalized that it is difficult to tell whether or not it fits your specific situation. Depending upon the situation, this advice can either be a benefit to your financial life or detrimental to your financial goals.

Financial advice is a lot like buying a suit. It needs to be properly tailored and custom fit for your needs. There is no such thing as a one size fits all approach to personal finance. The perfect financial advice for one person’s situation may be absolutely horrible advice for the next person’s situation.

One piece of advice that I always quibble with is paying down all of your debt first before doing anything else. This approach sounds nice in theory but I don’t know how practical the concept is in real life.

100% Debt Pay Down

Let’s say that you have $20,000 in credit card debt. You decide to pay off the balance over a three year time period by making payments of $600/month. You scrimp, save and plan to allocate every dollar that you have to your credit card balance. During the 36 months that you are paying down this debt, your hot water heater breaks. Since you have been sending all of your money to the credit card company, you have no emergency savings account. Now, you have to go deeper into debt and borrow money again.

Not only is this discouraging but it’s not the best move. The smart thing to do would be to pay down your debts and save money as well. Crises do occur from time to time and you want to make sure that you are equipped to handle them. It could take years to get out of debt and the average person can not go that long with a $0 dollar balance in their savings account.

There are a quite a few financial generalizations that I would question.

  • hire a real estate agent when looking for a house
  • buy a house while you are young
  • stock market is easy money
  • buy a home and flip it
  • your credit score is the most important number in your life

Make sure that whatever financial advice that your get or money saving tips you follow are appropriate for you.

That’s just one example that I know about. How about you? What’s the worst piece of financial advice that you have ever received?

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