jamespiska: A few Ridiculous Financial Tips, Part 2 |

রবিবার, ৩১ মার্চ, ২০১৩

A few Ridiculous Financial Tips, Part 2 |

?In 2008 housing prices are going to BLOW, dude??

Personal finance is a world filled with ideas and opinions that are in conflict with one another.? Like the U.N, except without those silly Spaniards.? While all sides to all personal finance issues generally have their merit, even those encouraging people to spend freely and take on as much debt as they like.? After all, that is why we have personal bankruptcy laws in the country, right?

Idiocy aside, sometimes well-meaning advice (at least in my opinion) gets pushed to the outer limits of rationality. When I come across such advice I generally take note and list add it to my ?A Few Ridiculous Financial Tips? series.? All of the advice to follow is not my own.? I present the advice and basic rational, and then my feelings on it.? Please note that all of the advice below would benefit you financially; this is indisputable.? What the authors of such advice are missing is how alienating, cheap (not thrifty), ignorant and time consuming some of the advice and rational can at times be[1].? Put bluntly: the authors of these tips are overly prescriptive, general, and specific.? On to the ridiculous!

FICO scores don?t really matter. The argument here, which is truly less an argument than a series of related facts, is that?the only true use a high FICO score has is to attain a better rate on your mortgage, saving you a lot of money.? Oh, and?that people with high FICO scores tend to leverage them, which translates to more spending and monthly bills.? As I said, this is more a series of related facts about FICO scores than an actual point.? Let?s try to extrapolate one. Could the point be that it doesn?t matter if you have a high FICO, unless you want to own property?? This would be pretty dumb, as, for example, landlords check your FICO before renting to you to determine if you are financially reliable.? To boot, a high FICO acts as a safety net if the situation ever arises where you need to take on debt to avoid a larger catastrophe, such as you buy a house and although you have an emergency fund, the appraiser missed the fact that the roof is in need of replacing.? The author of this ridiculous piece of advice makes the point that FICO scores shouldn?t be overly focused on, and to that point we agree, but you should definitely care if you have a good FICO score.? I?m going to bet this author?s FICO score is lower than Magic Johnson?s white cell count.

Instead of paying down debt, save for the long term. The idea is apparently that by saving for the long term compounding interest on the investments will far outgrow the extra interest paid on the debt.? Yes, this gem includes credit card debt, which can be over 20%.? If you follow this plan you will end up more broke than Alan Iverson. I discuss reasons why one might not want to pay down debt as fast as possible, but generally this is for the extremely financially savvy.? So if you are the typical American, you can play this game on a selective basis, but if you do it with your credit cards or any other high interest debt you are letting yourself be misguided by advice worse than Michael Jackson?s doctor?s prescription assignments.?

Don?t pay back student loan debt.? Screw the reasoning behind this hair-brained piece of intellectual diarrhea. If you follow this piece of advice, which is not from the financial community but can be heard commonly enough in college towns across the nation, do yourself a favor and just buy a slut-suit and a set of six inch glass hooker heels because you are going to be Sallie Mae?s bitch.

What do you think about this advice?

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[1] Of course, we are all responsible for defining our own version of Enoughness.? Should you agree with any of the listed ?ridiculous? tips then have at it.? To further note, I will never reveal the ridiculous piece of financial advice?s author; they know who they are?