I majored in English, not finance. My graduate school degree only touches upon finance. Other than the fact that I’ve read hundreds of personal finance books and written some 500+ posts on personal finance topics, I have no true expertise. In other words, you might disagree with my list below. That’s fine, because again, I am no expert. Everyone’s finances are different, which is why the term “personal” comes first. But with those caveats in mind, below is a list of some of the personal finance advice I hate.
1. More Education is Always a Good Thing – No! It’s Not! I know you don’t want to hear it, but from a purely financial point of view, many students today are spending more than their educations are worth. I don’t need to go through the list of low ROI majors, because they’re well known. Yet, despite this knowledge; parents, guidance counselors, family, and friends, continue with their propensity for encouraging prospective students to “follow their dreams.” What good is following your dream into six figure student loan debt? In my opinion, the entire education system in the United States needs to be re-examined.
2. Housing Will Always Come Back/Real Estate is a Great “Investment” – I suppose over a long enough period of time this is true, but when I look at the housing market, I can’t be anything but bearish. Not just in the present moment, but for the forseeable future. Yet I keep hearing people say the same thing: “I need to buy a house while the market is low. It’s sure to come back!” Well, says who? Isn’t it called a “market correction” for a reason? The economic and population trends appear to support future real estate doom. When you factor in the interest, costs, repairs, and likely rising property taxes (despite decreased property values), then how can anyone really feel comfortable with real estate as an “investment”?
3. You Should Help Out Your Adult Kids When They’re Financially Struggling – Too many twenty and thirty-somethings today have been coddled by their parents their whole lives. Continued coddling into adulthood creates a lack of independence and, in some cases, an inability to stand on one’s own two feet. Maybe the only way to really learn how to be self-sufficient is to be forced to be self-sufficient. In the best-selling book “The Millionaire Next Door,” this concept is coined as “Affirmative Action: Family Style.” There will always be true emergencies, but be careful of this slippery slope.
4. Applying Too Much Psychology to Personal Finance (For Example: the Dave Ramsey SnowBall Method) – Dave Ramsey is famous for coining the “Snowball Method” of Debt repayment. The basic idea is that you take all of your debts, and then start repaying the smallest balance first, pretty much regardless of the interest rates. Simple math would say, however, that the most effective method is to begin repaying the highest interest rate debts first– but Ramsey’s theory is that people need “small wins” to stay motivated. For me, the math is what it is. Psychology in personal finance has its place, but not when it’s costing me money.
5. Unpaid Internships Are Often a Good Idea – The idea of working for another person/entity for free, outside of “do-gooder” volunteerism makes my stomach churn. I know it’s required in certain fields (*cough* education), but the other day I read that one of the state’s Attorney’s General’s Office is seeking applicants for a one-year unpaid commitment from recent law graduates. And of course I’m sure you have some idiot law school counselors saying things like: “well, that would look good on your resume.” Perhaps that’s true, but at what cost? At the cost of bringing down the entire system?
6. You Don’t Need Life Insurance Until You Have Children – I hear this said all the time as a blanket statement. The fact of the matter is, certain married couples may wish/need to have life insurance. This is true whether they have children or not.
7. It’s Impossible to Succeed In This Economy – I think that if we all keep trying our best, keep our options open, and stay within ourselves, that we have a chance to succeed–even in this terrible economy. I don’t want to be told otherwise by anyone. Particularly not some talking head millionaires on television.
What’s your personal finance pet peeves? Who disagrees with mine?