If this is your first time here, Molly’s Money is a regular series I write on this blog that includes ALL things personal finance – debt management, budgeting, home buying, savings,investment, etc. I am NOT a financial advisor, but I am married to one! These are just things that I have learned over the years as I struggled with my own personal finances and ultimately, became debt free in 2012. Got a question about money that you want answered? Leave it in the comments below or email me!
I have never claimed to be an expert when it comes to the financial world… and I certainly don’t claim to be one now. My husband is really much more the “expert” as, well, it’s what he does for a living. However, going through the journey that I’ve gone through over the last ten years has certainly taught me a few things about how to properly handle and be a good steward of money.
I’ve also learned A LOT as John launched his financial advising company and all that comes with that… But along the way, and even now, I will often hear people give me advice, or maybe I’ll hear someone else talk about financial advice someone gave them, or I’ll even hear a commercial on the television or radio that is giving advice, and I will think to myself, “That has to be the WORST financial advice I’ve ever heard in my life. Ever.”
And while I really try to keep things positive and not spin anything towards the negative, I think we can actually learn a lot from “bad advice.”
So, today, I’m sharing with you FIVE pieces of absolutely dreadful financial advice that I’ve ACTUALLY heard…
These are in no particular order…
1. You Don’t Need a Budget to Properly Track Expenses
Yes, someone ACTUALLY said this to me. Look, you might have a mind like a steel trap, but there’s NO WAY you can actually properly track your income AND all your expenses without SOME FORM of written budget. I don’t care if it’s a spreadsheet, an app on your phone, or a really sophisticated abacus… but you need. a. budget. Unless you’re just bathing in money and you have more money than you really know what to do with and you don’t need to even worry about expenses, you need a budget. You need a budget. You need a budget.
Did I mention, you need a budget?
2. In debt? Just settle your debt. Settling your debt is the way to go.
Yes, I have also heard people say, “Just settle your debt!” Remember… there is a large difference between settling your debt and consolidating your debt.
Settling your debt is basically this: you have $20K in debt, but you “settle” your debt with your creditors for $10K. Sure, that looks great and sounds great because you are only paying back half of what you owe… but the truth is, they can come after you at any time for that remaining balance. Oh, and it will KILL your credit.
Consolidating your debt is working with your creditors (or a consumer credit counseling agency) to negotiate your interest rates, etc. and you pay back every. cent. you. owe… but you do it at a much lower interest rate than you normally would. THIS is the way to go if you’re in over your head in debt!
3. “Want to get your life back? File bankruptcy! Want to feel free again? File bankruptcy!”
I was in the doctor’s office a few weeks ago and there was a commercial on the TV that came on and LITERALLY said, “Want to get your life back? File bankruptcy! Want to feel free again? File bankruptcy! Want your life to be stress free? File bankruptcy!”
At first I thought it was a Saturday Night Live sketch… however, it was not. It was a real deal commercial… and the terrifying thing is, I am SURE there are people out there that are like, “Yeah, that sounds like a GREAT idea.”
There are VERY, VERY few instances in which bankruptcy is TRULY the way to go. And those instances are so rare I’m not even going to address them here. There are so many other ways to properly handle debt than bankruptcy.
4. You’re young, you don’t need to save for retirement now!
There’s a common misconception that saving for retirement can wait. Look, the sooner you save for retirement, ESPECIALLY in your 20s and 30s, the better off you’ll be down the road. Trust me. It is NEVER too early to save for retirement.
Think about inflation and all that jazz… money is going to be worth a lot less by the time you retire… so… start saving as soon as you can. Even if it’s just a little bit! A little bit is better than nothing. 🙂
5. Just put it on a credit card!
This is another one I strangely hear… that keeping a credit card balance is good. Or, if you don’t have the money, put it on a credit card and pay it off later. That’s how debt happens, ladies and gents.
It’s totally fine to use a credit card like a debit card and put charges on it, rack up rewards, and then PAY IT OFF IN FULL every month. And you’ll be able to pay it off in full every month because, you use a budget. 🙂