- Have you ever gone to your fridge,
opened up the door and then all of a sudden
a bad smell hits you right across the face?
Pow.
(opening door)
(exhaling)
(opening container)
(sniffing)
Ooh, that's stanky.
All right there's no doubt that bad leftovers
will smell that bad.
- It stinks, and I don't like it.
- But you know what also leaves a bad taste in my mouth?
Bad financial advice.
But not the bad financial advice
that comes from your in-laws, or your co-workers.
No, we're talking about the bad financial advice
that comes from personal finance experts.
So today I'm going to share what is five
common pieces of financial advice
that experts say that is just that bad.
We're gonna find out what those are and more, right now.
(upbeat music)
What's goin' on y'all?
Welcome back to channel Wealth Hacker Labs.
This is the channel dedicated to teaching
new ways to grow wealth that is not taught to you
in school or by your parents.
I'm am your gracious host Jeff Rose,
and let's just call it for what it is.
There is such thing as good advice.
For example, opening a Roth IRA.
Or, subscribing to this channel.
And there's also such thing as bad advice,
and that could be when a friend suggests
that you try rollerblading for the first time.
(people talking in background)
(crowd exclaiming)
And having been a financial planner
for over 16 years I have heard
my fair share of horrible financial advice.
- That's horrible.
- And this is not just from the financial experts,
I mean I've heard it from anyone and everyone.
But today I want to highlight what are five pieces
of financial advice, common financial advice
that you hear experts often share that is just bad.
♪ I'm bad, come on. ♪
- I'm just going to break this down
and find out what this bad financial advice is.
The first piece of advice that you hear often,
and you'll hear it more, and you'll hear it again.
And that is never use credit cards.
Now there are a lot of financial experts that preach this.
I mean they preach it like it's the word,
and there's one person that talks about it all the time.
And without naming names, this is somebody
that is really passionate about this advice.
Seriously, Jeff, you're gonna call me out again?
I know, I know, I know.
He keeps making these cameo appearances in my videos,
he just likes to show up what can I say?
But no, Dave definitely is all about no credit cards.
He wants you to pay cash, he wants you to use
the envelope method, he wants you to use your debit card.
And I totally get it, as of right now
there's over 13 trillion dollars of consumer debt
that all American's posses.
And on top of that, the average American
has four credit cards with almost 9,000 dollars
of credit card debt.
So is it really bad financial advice?
So early in my twenties,
this was not bad financial advice.
In fact, this was the advice that I needed to hear.
I had almost 30,000 dollars of credit card
and student loan debt when I shouldn't of had
any debt at all.
But after paying all of that off,
and finally understanding how to manage my money well,
now everything that we purchase
is through our credit cards.
And we have over four different credit cards
that we use on a consistent basis.
At the time of this recording I have over 300,000
Southwest points, and over 500,000 Chase Reward points.
And these are points that we use,
as a family of six we travel a lot
so we fly a lot, we stay in hotels,
and we use these points.
Actually my wife and I are gettin' ready
to go to Cancun, holla, for a little mommy daddy time,
and guess what, we are using our points.
Early on, we were able to take our entire family
to Jamaica utilizing all of our credit card points.
If you blindly accept this advice
and don't take the time to do the research
to see what all the different options
that exist with credit cards, specifically reward points,
you just don't know what you're missing out on.
Another blogger that I know, that's also a world traveler,
her name is Holly Johnson, and she has literally
traveled the world utilizing
all of her credit card reward points.
But taking it one step further,
she also was able to use her credit card
to pay off her mortgage and then use those points,
to travel the country with her family.
I mean, that's when you talk about
some wealth hackin' right there.
I know many of you are watching this,
and you're saying to yourself,
"You're just loaded and you like to travel,
"so I just wanna pay cash and use the envelope method."
I get it, many of us don't want to be world travelers,
we like just to stay home and stay in our comfort place.
- There's no place like home.
- And for you people, yes that's right, you people,
there is a credit card for you too.
You can go to nerdwallet.com,
they have a list of all these cash back credit cards,
that you can use and you just use the card
and you can get up to 5% cash back on different categories.
So, you're spending money and you're getting cash back.
Do you see how that works?
You use this, and you get this.
Oh, that's how it words?
I still think you're crazy.
All right moving on to bad advice number two,
on this one sorry Suze we gotta call you out here.
Money expert and former TV host Suze Orman,
and go ahead and just ruin the surprise,
Suze does make another appearance on this video.
She had this to say regarding wasting money on conveniences.
"Stop leasing cars, stop eating out,
"stop doing the things that's wasting your money
"and makes your life easier.
"Because in the long run it's going to make it harder."
Oh Suze, bless your heart.
First let me say, I get it.
A lot of people do waste money
on conveniences that they don't need,
and, or, they can't afford.
But as a business owner, as an entrepreneur,
and also a father of four children,
I totally get that time equals money.
Earlier in my life, I couldn't afford to waste
or spend money on conveniences.
But, as my business grew, as my family grew,
I realized that I wasn't wasting money
or spending money on conveniences.
No, in fact I was actually investing money,
to have more time, to make more money,
to spend more time with my family.
I can remember earlier in my life,
owning a riding lawn mower and I was that dad
that was cutting grass with my kids riding on my lap.
But after having my second son,
and then my third son, and then my kids startin'
to get involved in sports.
It became much more difficult to find time to cut the grass.
And then whenever I did have time,
I realized it was pulling me away
from the things I really enjoy doing.
And that was playing catch with them,
and playing basketball,
or whatever sport or activity that they wanted to play.
So that began a process of starting to hire out
different services, different conveniences,
so I had more time to do the things that I wanted to do.
Fast forward to modern day,
and I'm all about paying for conveniences.
I only have so much time in the day,
so if I can find somebody that's going to help
clean our house, help out with our laundry,
watch our kids whenever mommy and daddy
need some mommy daddy time,
or having our groceries delivered.
Having food delivered via DoorDash or Grubhub.
The list goes on and on,
because I realize I only have so much time
to work on my business, spend time with my family.
So I don't want to waste my time,
I would rather not waste my money,
but invest my money and buy my time back.
Bad money advice number three.
And this is always get the 401(k) match.
I know, I know, I'm going here again.
Now I'm not gonna spend too much time on this
piece of advice because I already did
an entire video with my good buddy Dave back there.
But here's the gist.
Often you hear you always have to do the 401(k)
if they offer the free match,
'cause you can't turn down free money.
Now, that's all good and well,
but the reality is that if you actually knew
what you were doing and you could choose
your own investments and take advantage
of the Roth IRA with it's tax free money,
well as we like to say here on the Wealth Hacker channel,
that is money in the bank.
I know I'm kinda leaving you hanging on this one,
but that just gives you more reason
to check out that other video.
You know what I'm sayin'?
Go check it out, Dave wants you to.
All right, bad money advice number four.
And this one isn't just bad, it's actually laughable.
And this is that you should never ever get a tax refund.
Or, that tax refunds are evil.
- So you think I'm evil, Bosco?
- I'm certain of it.
- Okay you remember our friend, Suze Orman,
who made an appearance earlier in this video?
Well, she's back.
And this is what Suze has to say about tax refunds.
- Why would you wanna get a tax refund?
It's not as if the government
pays you interest on that money.
Hundred or two hundred dollars a month,
to do all kinds of things with,
that you could create more for yourself.
But no, you just love that you're gonna
get this tax refund.
Biggest waste of money you will ever get.
- Suze, Suze, Suze.
Oh, that's just so funny.
Okay so I get it, so the IRS is not your friend,
you know, they're not going to look out for you.
If you scratch the IRS' back
it's not like they're going to scratch yours.
Hey IRS I got this itch right here,
will you, right there, kay can you help?
Come on IRS, help me out here.
But the way they make it sound,
it just seems like you're giving up so much interest.
So much free money to the IRS,
that you should be putting in your pocket.
But let's go ahead and break out some numbers.
According to Bankrate.com, the average tax refund
that an American receives is 1,949 dollars.
So, we'll go ahead and round that up to 2,000 dollars.
So let's say that you took that 2,000 dollars
and you put it into a high yield savings account.
And you opened that account with Marcus at Goldman Sachs,
that's currently paying you 1.7%.
If you had that 2,000 dollars in a high yield
savings account for one year the interest
that you would've made is 34 dollars.
That's three 10's and four one's.
34 dollars.
So that means that the average American
gave up 34 dollars because they got a tax refund.
(sighs)
Oh, the travesty.
(man crying)
But here's the reality, according to GOBankingRates.com,
over 69% of Americans do not have at least
1,000 dollars in their savings account.
So if getting a tax refund is the only way
that they can actually save money, then so be it.
Because chances are people were not getting
that tax refund then they were takin'
that money outta their paycheck.
It's not like they're actually going to invest it
because people kind of struggling with their money stuff.
So are tax refunds really that evil?
No, no.
Sorry Suze.
All right bad advice number five.
And that is renting is throwing away money.
And another way you can look at this
is that your home is your most valuable asset.
And I get it, if you had a balance sheet
and you've been paying off your mortgage
for a number of years,
your home might look like your biggest asset.
But whenever it comes to retire,
and you need to start drawing money,
drawing an income stream.
Unless you're renting out your house on Airbnb,
then your house ain't producin' no money.
When you rent you don't have to worry about
mortgage interest, or property taxes,
or maintenance on your home.
I witnessed first hand clients that couldn't
accept a job offer because they couldn't sell their home.
The home that they bought dropped in value tremendously,
and they were so underwater
that they couldn't afford to sell it.
Where money experts would argue that renting
is throwing away money,
I would say that paying rent means that you don't have
an expensive illiquid asset that would prevent
you from taking a lucrative job offer in another market.
It gives you options, it gives you flexibility.
And the same reason why you have cash
in an emergency fund, it's that liquidity,
the same thing can be said about paying rent.
Livin' out the American dream and owning a home
doesn't work or apply to everybody in this day and age.
So do not blindly follow this bad money advice.
If you rent and it's the best money decision
for you right now in your current situation,
then you own that, don't own a house,
own that you are renting.
And just let these experts yap away, because you do you.
Which one of these five pieces
of bad money advice have you been burned on?
Or maybe these are pieces of advice
that you agree with and you don't like this video at all.
Either way, I wanna hear in the comments below.
We are here trying to accelerate
people's wealth building and the only way to do that
is not conform to the status quo.
We have to think different, we have to be different,
that is what Wealth Hacking,
and being a Wealth Hacker is all about.
All right y'all I hope you enjoyed this video,
if you haven't liked it, you know what to do.
But until next time this is Jeff Rose
reminding you that it's your money,
it's your life and only you can make it awesome.
Until next time, peace.