Growing up I knew nothing about money, credit or much else to do with finances. Between going to college and starting my career I’ve gotten some pretty horrible financial advice along the way. I eventually learned the hard way just how clueless most people are about money. I came up with 5 of the worst pieces of advice I received as a young person just beginning life.
- This is good debt.
There are some forms of debt we are told are good debt meaning, the result of the debt will either increase in value or increase your value. Student loans, business loans and mortgages are good examples. When you start thinking any debt is good…that’s bad. You will be tempted to treat it like a good friend and let it stick closer than a brother.
Listen…there is no such thing as good debt. There may be justifiable reasons to take on a loan to accomplish a goal, i.e. owning a home, however, once this debt is taken on it becomes a burden until it is gone. If you ask me, there is no good reason to take it on. Other alternatives should be considered before acquiring debt and in the event you decide it’s best to take it on, treat it like the bubonic plague and get rid of it fast!!
- Get an MBA.
In today’s fast paced and competitive world, you have to be ready to outshine your educated and experienced counterparts and getting an advanced degree is the best way to do this, right? Not if it will put you in more debt than your career will be worth or just waste time and energy you could be using to get…umm…experience. If you are able to get an M.B.A without taking on additional debt, go for it! Sometimes this advice is given without regard to what it’s actually going to take to get that mug!
Obtaining an M.B.A is not cheap and if you’re thinking about financing it through student loans…faget about it!! An employer once told me the value of the M.B.A is becoming highly diluted due to the ease of obtaining it—and he has one. You can always work first and then have your employer pay for it, or let those grades shine in undergrad and find other debt free resources to pay up!
- Girl, you need to treat yourself, you work hard!
Unfortunately, most of people giving me this advice had very little to show for all their hard work. A little extra money in their hands meant more shopping and financing things they couldn’t afford. Treat yourself was code for “working so hard is making me miserable so I spend money to compensate.”
Yes, I work hard, but I’m not trying to work harder just to pay off all this stuff I just bought and can’t really afford. My idea of treating myself is traveling the world and enjoying a debt free life with nobody calling my phone for their payment because I’m driving a car I’m going to end up paying double for by the time all is said and done. Just because you work hard and make good money doesn’t mean you have to maintain a lifestyle that sucks up all you earn trying to keep up with the Joneses.
- Why don’t you just put your student loans in deferment/forbearance
For some reason, people have this strange idea that if they duck and dodge their student loans hard enough, they’ll eventually just go away. Going to school for the rest of your life and keeping your student loans in deferment will not make them go away. They will be there stalking you wherever you go!
Student loans are officially the bane of my existence. It makes me shiver to think how the government makes it so easy to get them. I’m also amazed at how many high income earners STILL have student loans hanging around somewhere. Get rid of those things!! Like…now!! Work 2 jobs if you have to…just kick those things to the curb!
- Just charge it and pay if off when you get the money
The idea is that you use your credit card for the convenience of buying something now and paying for it later, when you get the money. We are not a generation that likes to wait, for anything! Besides, a responsible person would quickly pay off the entire balance and move on with their lives, right?
Look to your left and look to your right, how many responsible people like that do you personally know? When you’re in college, already struggling to pay bills, living above your means or not that responsible in the first place, this is SUCH a bad idea. The fact that you have to charge it probably means you’re living above your means! As soon as the real money comes in, the charge on that credit card will be pushed to the back of the priority list where interest and late fees are waiting to add up. Don’t get sucked into the trap!
I’ll add this as a bonus!
- Finance a car to build your credit.
Just stop! Run away from this person and don’t look back.
If your credit needs help, the LAST thing you want to do is buy a sky high interest rate car to improve your credit! I want to cry EVERYTIME I see those $88 down, $88 dollars a month car commercials. Even if you WERE approved for that amount (most likely, you won’t be), who wants to only pay $88 a month on a car that cost $10,000. You don’t even want to know how long it’s gonna take you to pay that off. I’ll just let you do the math.
Parents, lets be wise about giving our children financial advice. Lets make sure it’s not what’s just been passed down to us and falls in line with what everyone else is doing but what will really give them a head start in life.
What’s the worst piece of financial advice you’ve ever received? Share in the comments!
Learn Early, Live Wealthy Principles:
-Treat debt like cancer and eradicate it fast!
-Don’t spend today without first considering tomorrow
-Earn to increase your giving more than your living
Learn Early, Live Wealthy 