This week we have a question from Carla, she wanted to know “What’s the worst piece of financial advice you’ve ever heard?” That was such a good question we both wanted to answer it, so we will. Susan’s going to go first and I am going second with the worst advice we’ve ever heard.
Only Pay The Interest On Your Credit Cards To Improve Your Credit Score
This makes me so mad! It’s not good advice. It’s expensively bad advice. The best way to improve your credit score is to pay off your full credit card balance every month.
Paying off the interest only means you are essentially giving away your money to the card provider every single month. Worse, it doesn’t improve your credit score. It makes it look like you can’t afford to take on any more debt.
You’ll know that I am obsessed with saving. The first place to start saving is on credit card interest – it’s the most expensive debt you have.
If Your Family Needs Money And You Have It, You Must Give It To Them
No, no you mustn’t. In fact, if there’s a way to ensure that a whole family ends up bankrupt it’s this lazy financial mantra.
Lending money to family may be the right thing to do but often, it’s not. Grown-ups don’t enable their family members to keep making bad money choices. They talk to them about why they need the money and then they evaluate three things:
- Is the money really needed now?
- Can they afford to lend this money without hurting their own lives?
- Is the family member likely to pay it back?
If the answer to any of those questions is “no”. The best answer is to tell the family member that you cannot lend them money and to tell them why. It might cause a little trouble but better that than to lose large sums of cash.