5 pieces of BAD financial advice I received over the years.

As I think back on the financial advice I have received throughout my life, I have come to realize that most of it was given to me or adopted by me, from people who didn’t really know that much about it.

Look, my parents didn’t intentionally provide me bad financial advice. They just didn’t know any better themselves, because it was most likely taught to them by their parents.

Although they didn’t provide me the know how’s of how to grow my income or my wealth, they did instill in me the value of hard work, showing up on time, and the commitment to whatever it is you are doing. And these things are just as important as the five bad ideas below that I wish I would have not learned.

I don’t want to call anyone out specifically, so I will just state the facts of the bad advice, not who I learned it from. Because the chances are they were most likely taught and adopted from many people I have been around in my life.

1. Buying a house: At the time I bought my first house I had a decent job. I must have been in my early twenties, like 21-23. For the time I was making so called “good money” whatever that means. The circles I was running in at that time, it was the thing to do. I had a steady girlfriend at the time, and the potential of marriage was there. So based on my knowledge base at that time and the circumstances, it seemed like the logical thing to do.

Why it was bad advice: I could pontificate on this for pages, but I will distill it down to a philosophical point first and then a fact.

First and foremost, in your early twenties you should still be exploring what it is you want to do. You should be learning. By buying a house you become committed to that house payment and your life then becomes all about making that payment. Instead of learning and exploring, you now have to stay put wherever you are because of the big obligation you have.

Facts: I wasn’t financially capable. Sure, on paper I was technically. This may ruffle some feathers, but if you need down payment assistance, you probably shouldn’t be buying the house. I know those programs exist for reasons. To help people who may otherwise never be able to buy a house. And in many cases, it is probably a net positive for most. However, if you can’t afford a downpayment yourself, you aren’t going to be financially capable of keeping up a house.

A house costs a lot of money to maintain. Things break, things need to be maintained, and inevitably, there are always things people want to change in their house. If you don’t have some money in the bank in addition to a 20% down payment. You are putting yourself in a potentially negative situation that adds stress and hardship that you just don’t need.

This was my case. I made it work. But I was house poor even with the help I received for a downpayment.

2. If you want to drive a nice car: I have written about this one a lot and it is still one of the biggest mistakes I made early in my earning years and I see others continue to do it. If you want to drive a nice car you will always have a car payment. Check out this post to see other writings I have on this topic that are even deeper.

When I was in my early twenties buying the house I couldn’t afford. There was also a belief and may be some necessity at times, for the need to have a pick up truck. The assumption was that you would always be hauling something or moving something since you own your own home.

Basically, some of this was true, but it didn’t require you to have $35,000 truck with all of the bells and whistles and the gigantic car payment to go with it. On the rare occasion you would need to haul something or move something you could easily rent something.

My family believed that the closer a car got to 100,000 miles on it, it was basically going to be a big problem. I doubt that was true then and I know for a fact it isn’t true now. There are plenty of nice cars out there that you can purchase for 5-10K, and maybe even less that are perfectly reliable.

Dave Ramsey says anyone who doesn’t have at least a million dollar net worth should never purchase a new car. Because the amount of money it will go down in value when you drive it off the lot, you can’t afford to take that kind of loss unless you have a million dollar net worth.

The first two pieces of advice and maybe it wasn’t only advice, but I was just following the herd. Were two things that I think a lot of people fall in the trap with.

3. Retirement Age: More is caught than taught I personally believe. Which means many of the things children learn and people in general learn is caught by watching other people do it. The people that we catch it from aren’t intentionally teaching us what they know or don’t know, but because we are around them we catch whatever it is they do. That is why it is so important to be aware of who you spend the your time with. But I digress.

I was taught that I would work roughly 40 years, and then retire one day in my sixties if I was lucky. Again, many of us have watched our parents do this. Our parents, parents, and maybe more generations in our own families follow this plan. I also, think that society as a whole pushes this same narrative as well.

How often do you see a young couple on the beach in some of these Fidelity and Vanguard commercials. Nope it is usually some older couple enjoying their retirement. So it is culture thing.

When I started doing my own learning on this subject I learned a very valuable lesson. Retirement isn’t an age. It is a financial number. And you can accomplish this number as soon as you want to. It is really up to you and me to figure this out. Once you have enough money or assets and can live off of these comfortably for how ever many years you think you will need to. You can retire.

Nobody is teaching this concept.

4. Keep your student loan because it is low interest: I will not call out the person, but I will call out the profession of the person who told me this advice. They were a mortgage broker. I guess I should have considered the source, but I was too stupid and naive at the time. There are many reasons why this is bad advice. But the obvious one is that the sooner you get rid of this payment, the sooner you have more money.

Secondly: Student loans can never be wiped away in a bankruptcy. And I don’t see this changing anytime soon. Paying for school as you go is the best way, but if you do take out student loans, your goal should be to have them paid off within one or two years after graduating. You don’t want this debt to stick around with you for long.

5. “Good Money” “A lot of money”: This one is a little more philosophical, but it is important and once again has a lot to do with the way you are brought up and the people you are around.

I mentioned earlier when I bought a house, I said I was making “good money”. Well, “good money” to who? Compared to my parents or others in my circle? Maybe I was. However, to the available amount of money in the market. I wasn’t making much at all. I have learned that my definition of “good money” continues to go up and up, based on the people I am around. So my advice is to get around some people who are really crushing it.

“A lot of money”, is the same as “good money” Some people might think $500 dollars is a lot of money. And some people might think that $500 isn’t anything and that $5,000 dollars is a lot of money. Regardless of what you think or believe, it is controlled by the mindset you grew up with and the people you are around.

If you want to have more abundance in your life you have to get around people who have it in their lives. Now, I get it. Some people may be living lies. They may be in debt to their eyeballs and living paycheck to paycheck. You aren’t dumb you can figure those people out.

The reality is that many of the things above will change over time. Or at least they should. If you aren’t growing your problems, your expectations, and your wealth, then the chances are you aren’t doing much.

Adopt an abundance mentality. The world is full of opportunity and lots and lots of money. The only thing stopping you from getting more and earning more, is you.

To your success and your future.

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