Many people are hungry for financial advice. Consequently, there are tons of books, magazines and web sites all clamoring for you attention and telling you they have the answers to all of your financial queries. Unfortunately, some of the same bad advice keeps getting passed along.
Time to stop throwing away your money. Here, we’ll outline some terrible financial advice you should avoid at all costs.
- Stay away from credit cards. Lenders want to see that you have some experience with credit. If they have nothing to go on, chances are, you won’t get a loan. Consumers with thin credit files (those who have little or no credit history) are more likely to get rejected. When used wisely, and provided that you have steady income to pay the bill at the end of the month, credit cards can help build credit history.
- Pay off your bills first, then build your emergency fund. The financial crisis showed us that emergency savings is vital. What good is a zero credit card balance if you can’t feed your family? Your primary focus should be on saving at least six months of emergency cash.
- Budgets are optional. Budgets are essential to making sure that you don’t overspend. Everyone needs a budget, regardless of income. If you prefer to call it a “spending plan,” because that makes you feel better, then so be it. Just get one.
- Take out as many student loans as you need. You can pay it off after you get a “real” job. If you can avoid being saddled with overwhelming student loan debt, by all means, do it. Explore all of your options. Instead of blindly taking out loans, look for scholarships, grants, and other forms of aid. Don’t take on unnecessary debt that will eat into your future income.
- If you’ve been reported to ChexSystems, you can’t open a checking account anywhere for five years. This is wrong. You might still be able to open what’s called a second chance checking account (also known as a fresh start checking account). Check with your local bank for details.