Common Financial Advice Worth Ignoring
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ou might have heard about many people sharing their own financial advice. Some may be quite far out while some may seem like sound advice. There are also some other financial advices that may seem quite sound but may be better off ignoring. Here are just some of them:
"A student loan is considered a good debt."
From an initial point of view, this might seem sound enough. After all, the loan is taken to fund one's education and get to the best schools in order to have a brighter future. But then again, a student loan can become an early debt trap for those students who might find themselves unemployed right after graduation. Even those who may find work will need to deal with repaying the loan which can become quite a burden as well. The better advice is for students to look for more affordable schools to enroll into and avoid student loans instead of pushing for getting into the best but expensive schools via student loans.
"Avoid using credit cards."
This is another common financial advice that may not always be sound. Totally avoiding credit card use can make it harder for people to avail of much needed loans when they really need to. Financial institutions usually look for those who may have a credit history as ideal candidates for loans that they provide. Credit card use is the best way to establish a good credit history that financial institutions can clearly look at an evaluate loan candidates. Using credit cards more responsibly might be a sounder financial advice to follow.
"Buying a home is always a good investment."
It is everyone's wish to have a home of their own. Some even try to take advantage of every loan they can avail in order to buy the biggest home they can have. After all, a home is always a good investment, right? Wrong.
Just like any other investment, a home may also go through its ups and downs. Its value does not always go up and up. Just look and the recent US housing crisis. People started looking at homes as a good investment and pursued buying bigger homes that they do not really need. When the real estate values drastically went down, so did the values of their home. Many people ended up with costly mortgages for their suddenly undervalued homes that they can no longer afford to pay. That is an investment that's gong down the drain.
ou might have heard about many people sharing their own financial advice. Some may be quite far out while some may seem like sound advice. There are also some other financial advices that may seem quite sound but may be better off ignoring. Here are just some of them:
"A student loan is considered a good debt."
From an initial point of view, this might seem sound enough. After all, the loan is taken to fund one's education and get to the best schools in order to have a brighter future. But then again, a student loan can become an early debt trap for those students who might find themselves unemployed right after graduation. Even those who may find work will need to deal with repaying the loan which can become quite a burden as well. The better advice is for students to look for more affordable schools to enroll into and avoid student loans instead of pushing for getting into the best but expensive schools via student loans.
"Avoid using credit cards."
This is another common financial advice that may not always be sound. Totally avoiding credit card use can make it harder for people to avail of much needed loans when they really need to. Financial institutions usually look for those who may have a credit history as ideal candidates for loans that they provide. Credit card use is the best way to establish a good credit history that financial institutions can clearly look at an evaluate loan candidates. Using credit cards more responsibly might be a sounder financial advice to follow.
"Buying a home is always a good investment."
It is everyone's wish to have a home of their own. Some even try to take advantage of every loan they can avail in order to buy the biggest home they can have. After all, a home is always a good investment, right? Wrong.
Just like any other investment, a home may also go through its ups and downs. Its value does not always go up and up. Just look and the recent US housing crisis. People started looking at homes as a good investment and pursued buying bigger homes that they do not really need. When the real estate values drastically went down, so did the values of their home. Many people ended up with costly mortgages for their suddenly undervalued homes that they can no longer afford to pay. That is an investment that's gong down the drain.