Over the years, I've been given tons of financial advice - some good, some bad. Here are 5 of the best financial truths I didn't know I needed to hear.

5 Financial Truths I Didn’t Know I Needed to Hear

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Over the years, I’ve received an array of financial advice from various people in my life. Some of the advice has been spot-on, and some has been downright horrendous. The worst part about bad advice is that it’s usually unsolicited and almost always out of the blue.

How many times has your long-lost aunt, a co-worker, or someone you barely know advised you on how to spend or save your money? Laughably bad advice has been thrown in my face hundreds of times over the years, if not more.

Some of the worst financial advice I’ve received includes:

“Buying rental property is too risky. You’ll struggle to find tenants and lose your investment to foreclosure!” This advice came from someone who had never invested in real estate before.

“Keep a balance on your credit card every month. It helps you build credit.” An old boyfriend shared this gem with me.

“Don’t prepay your mortgage! You need all the tax deductions you can get.” A hundred people have urged me to sign up for a lifetime of mortgages over the years.

“Don’t put so much into your retirement account. You guys are young and have plenty of time.” This advice came from an accountant!

While people who give advice usually have your best interests at heart, it’s still important to weed the good from the dangerous. Thank goodness I never listened to the people who said I shouldn’t invest so much in my future – and that I never ran up more debt (or stayed in debt) to improve my credit or extend my mortgage interest tax deduction.

And thank heavens I never took financial advice from my realtor or my bank. Good grief. Based on our current income and lack of other debts, I could probably qualify for a $1 million mortgage. But just because someone says you can do something doesn’t mean you should, right?

5 Financial Truths I Want to Scream From the Rooftops

Sure, the terrible advice I’ve been given has left a lasting impression, but I’ve also been offered some amazing advice that I use to guide my financial decisions to this day. While there’s plenty of good advice on the web, there’s some financial advice I wish I could shout from the rooftops! Yep, it’s that good… and it can make a huge difference in your quality of life and the way you build wealth.

Here are five of the best financial nuggets of wisdom I have ever received, along with how they’ve changed me:

“Ride the wave while you can so you’re prepared when it crashes.”

This amazing gem of wisdom came from my friend Sam Dogen at Financial Samurai. I can’t find the exact email where he said this, so I’m summarizing. But, here’s the gist of it:

We were chatting about freelancing, blogging, and entrepreneurship. I shared that I’ve been fortunate to have so many high-paying writing clients over the years and that my blog has done so well.

Sam reminded me that fortunes can change quickly. He said you should work really hard and ride the wave while you can. That way, you’ll be financially prepared when the hammer drops or the winds shift – which they always do.

A lot of people in our personal lives wonder why I work so much when we clearly don’t need the money. This is why. I have the opportunity to earn a lot of money now, so I’m going to ride the wave of success as long as I can. By the time the bottom falls out, I should be set for life… or pretty darn close.

“Live below your means.”

My mom told me to live below my means all the time when I was growing up, but I barely knew what she meant. Now that I have kids and a house, I totally get it. Even though many people might look like they have it all, far too many families use cheap and easy credit to make themselves appear rich.

Unfortunately, it’s all an illusion. Just because you’ve got a big SUV in the driveway doesn’t mean you have a red cent in your retirement account!

By living below your means – and not at or above your means – you can avoid many of the pitfalls of modern life. You can save money for the future and for emergencies, avoid debt, and spend money on the things you really love.

I’m so glad I heeded my mother’s advice many years ago. Thanks to my mom, I had the discipline to buy a $188,000 home when we could easily borrow five times as much.

And, you know what? Living below our means has made it easier for us to live the life of our dreams – to travel every month, never worry about money, and to give our kids opportunities we never dreamed of. That freedom is everything to me, and it’s the result of us living well below our means.

“Pay your freaking house off ASAP.”

This is yet another gem that came directly from my awesome parents. They paid their house off after I graduated from high school and have enjoyed a lot more flexibility since.

In fact, my mom suddenly retired from her job about a year earlier than she planned. She says it was because she had a really bad day and had finally had enough! Most people don’t have the flexibility to quit their jobs and retire early because they have mortgages and car loans and bills to pay. But my parents were smart, and they still are.

One of our rental properties is now paid off, but our primary residence is next. I hope to have it paid off by the end of the year, but it could be paid off early next year.

Either way, I’m never going into debt again after this… unless, of course, I find another rental property I can’t live without.

“Don’t buy stupid, expensive cars.”

This advice actually came from my old boss. They earned an extremely nice living, yet they drove very basic minivans to work. He always said his strategy was two-fold. First, driving basic cars helped them save money on something they didn’t really care about (their daily commute). Second, driving regular cars helped them stay under the radar – as in, it helped them hide their wealth.

Now that I earn more, I totally get that. I also believe that cars are one of the biggest drains on the income of middle-class Americans. The average car payment is around $506 and 68 months long, for heaven’s sake! Stop spending your money on a depreciating junk of metal, and you’ll be a lot better off.

“If you will live like no one else, later you can live like no one else.”

This quote comes courtesy of Dave Ramsey. While I don’t agree with him on everything, this is one of my favorites.

Basically, he’s saying that if you’ll make a few sacrifices now, you will save yourself a lot of trouble. In other words, save for retirement, avoid debt, and keep your expenses low, and you can retire earlier and enjoy a much better quality of life in the future.

This is my main financial goal at the moment. We try our best to keep our expenses low so we can save and invest as much as we can. For us, that means maxing out our Solo 401(k) plans with Vanguard every year, paying off our only debts (houses), and saving and investing whatever’s left.

If we keep living like this long enough, we’ll never have to worry about money again.

Final Thoughts

When I look at all the financial advice that has served me well, I realize that most of it goes against the grain. Sadly, the best thing for your finances is often the opposite of what everyone else is doing.

Why? Because most regular, everyday people really suck with money… and they’ll work their whole lives because of it.

If you want to be different – and to grow rich – you should strive to march to the beat of your own drum. And yes, that includes ignoring a lot of advice from the well-meaning people in your life.

But, you should also keep your eye out for the amazing advice you didn’t know you needed to hear. Once you have a handful of solid money rules to live by, you can start building the life of your dreams.

What is the best financial advice you’ve ever received? What is the WORST advice you’ve ever received?

Over the years, I've been given tons of financial advice - some good, some bad. Here are 5 of the best financial truths I didn't know I needed to hear.

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19 Comments

  1. I appreciate hearing from someone with a great income who is still preaching to live on less than you make, prepay your mortgage, don’t buy fancy cars, and also not necessarily expect to always have the same income opportunities. So wise. Thanks, Holly!

  2. I think some of the biggest worthless advice out there is about buying big homes. We live in a 1200 square foot house and we got it for cheap. We have a cheap mortgage as a result. Other people in our situation might try and save up for a bigger house. I would rather live with reasonable expenses, especially since we live in a good neighborhood and like our neighbors. Now we are able to finish all our student loan debt payments (we’ll be done this year) and then really pad our retirement savings. While we won’t be able to retire early, we did have a late start in really getting serious on our retirement savings and now we can actually afford to catch up. I’d like to be able to retire at 62 and be able to actually afford to do so and not be dependent on my kid.

    I can’t believe your accountant would say that—yowza. But then he’s probably like other people I talk with at work, who think they need to buy brand new cars and pay for people to keep doing their yard/house work even after they retire, so they end up working forever so they can afford it.

    1. I agree with you about homes! A lot of houses around here are out of control. You would think people need 3,000+ s.f. for two kids. It’s craziness. Whenever I see homes like that, I immediately think of how much they cost to maintain.

      And yeah, I was not impressed with the accountant that told us that. Then again, he is not a financial advisor. =/

  3. I think a lot of this makes sense for most people. My wife and I try to follow most of these ideas, but we bought a $650,000 home because our “forever home” to have room for our growing family and be in an excellent school district. Plus I work from home, so I wanted my home to be nice since I spend most of our time here.

    1. I hear ya. Everyone has their priorities – that’s for sure. For us, we have a nicer home than we probably need (modest, but still pretty nice) and we spend some money on travel every year. We all have to decide what works best!

  4. If people could just follow these simple ideas, they would be much better off for it! We have done all of these (although riding the wave meant buying cheap foreclosed homes while we had the chance!) By paying cash for a small home we could renovate, we have so much more flexibility without a mortgage. Wouldn’t trade that for anything. =)

    1. The freedom really is everything. Freedom from unnecessary bills. Freedom to design any life of your choosing. Freedom to do work you actually love. I will never give it up in the pursuit of more “stuff.”

  5. There’s a reason these sound hackneyed–we keep repeating these phrases because they’re true. 🙂 I wish I’d taken these phrases to heart much earlier in my life, but I’m still thankful I came around. Living beneath my means has been the best way to pay off my debt and live better. 🙂

    1. Ahhh….me too. I wish I was better with money in my early 20’s, especially. Then again, I didn’t have a lot of money then so it probably wouldn’t have mattered. Plus, better late than never!

  6. Hi Holly,
    I think you totally hit the nail on the head with these. My Mom also taught me to live within my means and pay off the mortgage ASAP and I am eternally grateful to her, even if at the time I was dissapointed that I didn’t get all the stuff I wanted.

    In terms of recent good advice, yesterday’s gem came from my step-father regarding investing. There’s a lot of talk in Australia about the housing bubble which is making me nervous as we’re considering buying an investment property. His advice; you’ve got time. The bubble may burst, the market may crash but if you’re in it for the long term, it doesn’t matter. It really put my mind at ease, as this was worrying me about investing.

    1. That’s fairly good advice, too!

      We could have another real estate bubble, here. Not necessarily where I love, but some parts of the country have real estate values that are spiraling out of control.

  7. Ride the wave. That’s what I did at my job. My husband supports our family. I have worked some, mostly part-time, over the years. I had a relatively high paying job that I started in 2003. After paying my 10% tithe, I put 90% onto our house and paid it off in about four years. (We had already had our mortgage for a few years but weren’t able to pay much extra towards the principal). I worked a few more years to save for certain items and I was able to quit. We have been extremely blessed. However, the job I had was a medical transcriptionist. Those types of jobs are getting phased out as physicians use voice recognition and jobs are shipped out overseas, etc., and the pay is not good anymore, for the most part.

    1. It sounds like you made some really smart decisions during the prime of your career! Good job! I am currently riding that wave and I hope to stay on it for a while =)

  8. If followed, those five tips can take you a long way financially. I also agree with your advice about not following the crowds. 10% of the people have 90% of the money.

  9. I absolutely love all of this. These are all great financial truths. If only more people read this so that they could realize it as well that life could be better if you were smarter with smarter.

    Sharing! 🙂

  10. I love these, especially the one about being prepared for the winds of fortune to change at any minute. I know you stress yourself out a lot working so hard, but it really is smart to load up while the loading is good. That way you’re insulated if freelance work rates drop or dry up or whatever. Not that I think it’s really going to happen, but for anxiety’s sake… Best to have some reassurance.

  11. All great pieces of advice. The big problem when it comes to cars and homes is that most people only think in terms of the monthly payment. They feel if they can afford the monthly payment, then they can afford it. Think this way enough times and after a few years you will be making monthly payments for cars, houses, jet skis and exercise bikes for the rest of your life!

  12. I would add one more, “WHEN YOUR SITUATION CHANGES, MOVE QUICKLY TO ADJUST”. I lost my job with 60 days notice. Within that 60 days, I emptied, cleaned and rented out my house. I moved into our cheaper rental 40 miles away. I moved my son to his Dad’s house since he was 16 and in school. It was harsh giving up custody and a lifestyle but it was necessary. I still own that rental house today. My son helps with maintenance and it will be his someday. Without acting quickly, I would have lost it.

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