The Worst Financial Advice Ever

Most of the time, the financial advice that I hear is pretty good. Things like buy used cars, invest for retirement, and pay down debt are all solid pieces of advice that will help us to become more financially secure.

However, I have also heard some pretty bad financial advice.

I asked some of my friends online about the worst financial advice they had heard. Just like me, they have heard a lot of bad advice. Here is some of the worst advice that they have heard as well as my response to all of this horrible advice.

1. Your mortgage

Dads and Dollar$: “Don’t pay off your mortgage early, or you’ll lose your tax break.”

There is a really good argument against paying off your mortgage early, but the tax break isn’t usually a factor for most people. With the increased standard deduction, most people aren’t even getting a tax break on their mortgage this year.

2. Leasing a vehicle

Calm ‘n Cents: “Leasing a vehicle is better than owning it outright.”

Car companies really seem to want us to lease a car instead of buy it. Maybe they actually make more money on the leases than the purchases!

3. Car payments

MyDebtFreeJourney: “You’ll always have a car payment.”

Not having a car payment is one of the things that will allow my wife and I to retire by age 50. I calculated that we can increase our retirement savings by almost half a million dollars just by investing a car payment in an index fund.

4. Happiness

GoTraveLoco: “Money doesn’t make you happy.”

Paul explains further: “More money gives you more choices and that does increase the potential for greater happiness. The quality of your choices is, as always, the wild card!”

Money, by itself, will not make anyone happy. But it can help us buy great experiences, which can increase our level of happiness.

5. Savings

One Shot Finance: “Put all of your money in a savings account, it’s the only safe place to store it.”

Savings accounts aren’t even safe from inflation since a good savings account only pays around 1-2%.

6. Credit cards

My Financial Sensei: “Credit cards are inherently bad.”

Credit cards are one of the worst financial products out there if we don’t pay them off every month. However the rewards from them can be great. My family and I have saved over $30,000 on travel over the past 5 years by taking advantage of credit card travel rewards.

Enjoying Every Mile (my wife): “Choose your credit card based on the design and color on it. I want my money to be pretty.”

My wife, Laura, and I both agree that we would rather have the travel benefits of a good travel rewards credit card than a credit card that shows our favorite animal or school.

7. Investing

To Financial Freedom: “Don’t invest in stocks, it’s too risky and you will lose money.”

People have been giving this advice forever, whether the stock market is high or low. This advice was especially prevalent at the end of 2018, but the market climbed 29% during 2019.

One Million Journey: “Invest in Forex.”

I don’t really know anything about investing in Forex, but I only hear about the winning trades. Maybe people aren’t telling us about the trades that don’t make money?

Mawer Money: “Put all of your money into Bitcoin.”

We could have been a Bitcoin millionaire if we invested in Bitcoin back in 2015 or 2016. And honestly, I wish that I did this. But once everyone starts to hear about an investment and starts telling you to invest in it, then the time to become a millionaire has probably passed.

8. Employment

The Best Interest: “Don’t take that raise! You’ll get bumped to the next tax bracket and actually lose money!”

Since the United States has a marginal tax system, you can’t lose money by getting a raise. For instance, if you get a raise from $40k to $41k, you will move from the 12% federal tax bracket to the 22% tax bracket. However, this does not mean that you will pay 22% taxes on your entire salary. Instead, you will only pay 22% on each dollar above $40,125.

9. Housing

Russell Humphrey: “Buy the biggest house you can afford.”

Handful of Thoughts: “Buy as big of a house as possible. Stretch yourself because you will always make more money.”

I was amazed at the size of mortgage that my wife and I were approved for before we purchased our first house. I’m glad that we didn’t purchase the house that we were approved for. However, our third house that we purchased was the biggest house that we could afford. Although we loved the house, we are even happier that we made the decision to sell it.

10. Education

Minnie St. Claire: “Get a student loan when you are already working in your chosen field and earning a living because you can only be successful with a college degree.”

College is not as necessary as it used to be, especially with all of the great money making options online.

ScoobyRoo: “Loans for school are worth it.”

One of the things that seems to hold so many people back financially is debt. I suppose that getting a big loan on the path to a huge salary may be worth it. However, attending school without loans is, of course, the ideal option.

11. Debt

Going Fire: “Debt is bad.”

Brian from Going Fire goes on to explain that “taking on debt that can lead to great future income is not bad debt when done with a plan.”

I am really working hard to pay off all of my debt and can’t see myself getting additional debt for any purpose. However, for someone with a different risk tolerance than me, like Brian, taking on a bit of debt to purchase an income producing asset could be a good thing. It’s just not something that I will do.

---

What is the worst financial advice that you have heard? Let us know in the comments.

And thanks for reading!

~Nathan

---

Let’s keep living a great life … with the help of money. So what’s next?

• You can travel for free by using rewards credit cards.
• You can get motivated and get out of debt.
• You can check out next post or the previous post and continue to learn.

But no matter what you decide to do, let’s leave the ordinary behind and take action today!