Financial Advice You Must Ignore at Every Cost
Taking financial decisions can be overwhelming. You may be occasionally tempted to ask your peers and family members if your financial plans are right. This may result in you getting a plethora of opinions: some may be sound, but one cannot vouch for all the advice you get from an unauthorized persona.
After all, your uncle, who retired fifteen years ago, and has never kept in touch with the changing market conditions, may not be able to guide you sufficiently when it comes to technicalities like comparing mortgage rates, financing loans, or maintaining credit cards.
The problem then arises is which advice you should accept and embrace while you should reject outright and flush out of your brain. There is no sure way to categorize advice. However, if you receive any of the advice below, you must run for safety. After all, bad advice can ruin your financial portfolio and cause you hundreds of dollars of loss.
1. Credit Cards are an infliction
You might be told that you should avoid using credit cards at all costs. In fact, some extremists would also tell you that living through credit card would eventually spell a financial crisis for you in the future where you would be unable to pay your credit card debts and go bankrupt.
However, the truth is, nowadays, spending through credit cards can lead to an actual increase in your spending power. Many banks will offer you up to 6% cashback upon purchasing through a credit card. Likewise, many credit card vendors will offer you rewards and points upon using the credit cards.
These rewards can add up over time and offer you luxuries like free travel. However, do exhibit caution that you do not use the credit card over and above an amount that you can pay off with your next month’s salary.
2. Do overspend on luxuries
You may also be told that you should avoid extravagant expenditures that provide ease in your life. The narrative behind this is usually simple: you could save this extra money and add it to your retirement contribution or use it to pay off your mortgage.
However, the wise ones will tell you this is lunacy. You earn so that you can live a better life today rather than just making grand plans for tomorrow. Also, if you get extra time at hand because you hired house help or traveled with your own car rather than with public transport, you can invest this time in taking the next big leap in your work life.
3. Your home is your biggest asset
Though this may be true when it comes to your house’s net worth can hardly ever help you in times of financial difficulties. Its value will always fluctuate, and you can never accurately predict how much your house will pay you off eventually. Likewise, if you are ever in financial difficulty, your house can not help you with liquidity problems unless you sell it off completely or get a tenant to pay you to rent if you have rooms to spare.
Keep these tips in mind when going advice hunting. If someone resounds these pieces of advice, you know you are in the wrong hands.
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