Terrible Money Tip to Ignore

Despite the fact that many of us were taught as children that it is impolite to talk about money, the world is filled with people who want to tell you exactly what you should do with yours. From gurus who seem to think coffee is the root of all money problems, to your neighbor who just loves to hand out pearls of “wisdom”, we are bombarded with advice. Some of these tips are terrible.

If someone offers you the following financial advice, you can ignore it completely. As for whether it’s worth arguing with the erroneous logic of the EA … well, we’ll leave that decision to you.

“If you stopped buying expensive coffee, you wouldn’t go broke.”

People who hate to have fun love to remind you that this little purchase that you regularly make is ruining your financial future. Of course, $ 5 can empty your bank account faster than you think. But your regular trips to the coffee shop are probably not about “putting a million dollars down the drain,” asSeuss Orman would like to make you think.

If you take the $ 5 a day you spend on coffee and put it in over 30 years, you won’t have nearly a million dollars. You will have around $ 200,000, which might be enough motivation to cut back on additional purchases a bit. But giving up coffee, soft drinks, takeaways, or happy hour won’t completely change your finances overnight. Make the next big cup if you don’t want to brew coffee at home.

“Just go to graduate school, you may need a higher degree.”

Remember when we were just starting out of the Great Recession and there was no work and some of us said, “Let’s just go back to graduate school. All this will be decided by the time we finish our studies. ” It was a great idea, except that most of these people still have a bunch of student loan debts. The salaries of people with an advanced degree do not always match the level that one would expect from an advanced degree.

If you start your college degree knowing that you might need a higher degree to succeed in your career (to become a doctor, lawyer, or an actual rocket scientist, for example), then the value of investing in graduate school is obvious. If you can’t clearly state how a graduate degree will accelerate your career (with numbers please), it’s time to rethink the whole idea.

“You should set up an LLC to help with taxes.”

Whether you are freelancing or starting a small business, you can expect everyone to have their say on whether you should be a sole proprietor, LLC, or other business entity. But beware of this “tip” because setting up a limited liability company does not affect your taxes in any way! This will somewhat limit your legal liability in the event of a claim against your business, protecting some of your personal funds. It is often recommended for self-employed beginners who are nervous about doing things wrong. Yes, you will need to save on self-employment taxes, but setting up an LLC will not save you from these early financial problems associated with growing a business.

“Owning a home is the only way to accumulate wealth. Renting is a waste of time. “

Housing prices are rising much faster than wages, so don’t be discouraged if you spend so much of your income on rent that you think you can never save enough for a home. your own. Putting money into an investment counts as “growing up” in the same way as getting a mortgage.

And for many, home ownership just doesn’t make sense. Before you end up feeling tied to the corner of home ownership or collapse, remember that your individual circumstances, as well as those of the region you live in, may add more points in the “for” column when renting.

“Just make the minimum student loan payment until it is forgiven.”

If you work in the public service and fulfill the requirements of the program elusive forgiveness of loans for public services , I will not argue with you about it. I don’t really believe in the longevity of the program, but I don’t blame you for trying.

But if you are using any other student loan repayment plan, there are some steps you can take to shorten the time it takes to pay off large sums of money for your degree. We have a list of what you can do to shorten your repayment period . While we’re not promising to shorten your schedule for years, you can rest easy knowing that even if you have a lot of debt, you can start writing off most of it a little faster.

Tell us in the comments about the worst financial advice you have ever received and how you answered it.


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