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Debunking Popular Money Tips

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Thanks to the internet, anyone and everyone can give out financial advice these days, regardless of whether or not they are actually qualified to do so. This unfortunately can lead to some advice floating around the internet that isn’t actually great for your finances. Let’s look at three common money tips that aren’t as great as they claim.

1: The treat factor

The claim: Cutting out your daily treat  – whether that be a soda, coffee, or other small indulgence – will solve all your money problems.

The truth: While spending a few dollars on a Diet Coke every day isn’t insignificant, it likely won’t make a huge dent in your budget. Say you purchase a $4 drink all 365 days of the year – you’ll have spent a grand total of $1460, which is nowhere near the cost of a down payment on a house. If it makes your daily grind more bearable, it’s probably worth it for your quality of life to keep buying your daily treat.

The fix: If you really need the relief of cutting a couple dollars from your budget everyday, consider purchasing it less often. And, if you do, be sure to set aside the money you don’t spend on that soda so it doesn’t disappear. If you’re looking for a way to make significant changes to your financial situation, consider cutting back on bigger expenses.

2: Cut up your credit cards

The claim: Get out of debt by taking a pair of scissors to your credit cards.

The truth: You can still accumulate debt with your cards in pieces. Destroying your cards won’t help you kick a tendency to overspend. It’s also important for your financial health to have some open lines of credit – and it can be damaging to your credit score to close or have an inactive credit card.

The fix: If your credit card debt is out of control, take steps to rein it in. Try creating a detailed monthly budget that clearly outlines your expenses and how much they cost, and how much you’re spending on nonessential expenses. Then, make a plan for paying down your outstanding debt. Wherever you have even a little bit of wiggle room, you can put that money towards paying down debt. You can look for ways to trim expenses or boost your income so you can get out of debt sooner.

It’s also good to consider consolidating any high interest debt. If this sounds like a situation you might be in, give us a call! Our personal loans are great for debt consolidation and can often provide much lower interest rates than credit cards these days.

3: Follow your passions

The claim: Do something you love, and you’ll never work a day in your life.

The truth: Passions don’t always pay the bills. In fact, choosing a career based on passion alone can mean a lifetime of financial struggle. Not to mention, if you’re struggling financially, there’s a good chance you will grow to resent the passion you once enjoyed partaking in.

The fix: It’s best to work at a job you enjoy that also pays the bills. When choosing a career path, look for occupations that are related or similar to your passions, while also considering the average salary for each, and how much income you’ll need to cover your expenses. You can always continue pursuing your passions outside of work, as a hobby or side hustle.

Consider a job that plays to your skills, if not your passions. This way, you’re more likely to succeed at your career and to find it fulfilling as well.

In summary, there are many helpful money tips on the internet, but not all advice is created equal. Be mindful of what financial advice you follow, and you’ll have better chances at financial success.

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