Sure, everyone has an opinion and this is no shortage of that. There are plenty of theories going around about how to handle finances, but really, every situation is different, so there is always advice but maybe not be a “wrong” answer as much as there are more than one “right” answer. There are actually ideas that are said to be bad for your finances, but actually turn out to seem to be only myths.
It’s Wrong to Tackle Small Debts First
In the grand scheme of things, you should pay down the accounts with the highest interest first, otherwise you are wasting away plenty of money on interest every month, BUT that may not be the only right answer. We need to see progress when paying down debt so we don’t feel like we’re sinking too much, so tacking the smaller debt first and seeing that balance go down to zero could give you motivation to continue in being successful in paying off debt. Budgeting can be like dieting, not fun at all, so you need motivation like weight loss.
Close Credit Accounts When Balance is Zero
Speaking of balances going down to zero, it may have taken you years to pay off credit card balances, which is a huge accomplishment. Now that the balance is zero your first instinct may be to close the accounts when there is no balance so you don’t risk yourself charging up the accounts again, but this could actually do more harm than good. If you have debt on other cards, closing these accounts could actually hurt your credit score since the available credit you had will now be gone and it could increase the debt compared to the available credit.
Renting is Worse than Buying
Sure, buying does grant you equity in the home as you pay down the mortgage, not to mention tax credits for property taxes, but you are on the hook for quite a large liability in a home, the housing market, not to mention if any repairs or renovations will need to be done, at which they most likely will as the home ages. With renting you don’t have the equity, but you could have the freedom to move around as you choose, live in a downtown, especially when you are young it could make sense if you are bouncing from jobs or figuring out if you prefer city living or suburbs.
Finances Need to Be Combined with Spouse
When getting into any serious relationship, especially if living together or planning to get married, it’s a great idea to have the money discussion, even if it’s an awkward one, where you discuss finances, debt, and spending habits, which could set the tone for years to come when it comes to being in debt or where the spending money is going. That doesn’t mean you need to combine finances though, which you can still keep separate accounts, especially if you want to have some individual choice on where your personal money is spent on after the necessary expenses and savings.