Popular Money Rules I Refuse to Follow

Popular Money Rules I Refuse - picture of man refusing money

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On the internet, you can find all kinds of conflicting financial advice. Not only are there a gazillion ways to get out of debt, but there are opposing strategies when it comes to investing, saving for college, paying off your house, and more.

Some bloggers and financial personalities share their advice as if it were the gospel. For these “experts,” it’s their way or the highway. If you don’t follow their advice, you’re simply doing it wrong.

Unfortunately, not all financial advice on the web works for everyone. Some rules are worth breaking, folks. And the rules I’m about to share are some of my faves..

Hold Low-Interest Mortgage Forever

Want to know who believes in keeping a mortgage forever? Somebody who wants to make a commission, that’s who. “Pay it off slowly,” they say. “You can make more by investing,” they tell you. Sure, but what happens when you don’t?

Standard sales talk convinces you that carrying a mortgage is normal. Heck, everybody is doing it! Oh, and when you’ve “outgrown” your current house, just trade that old mortgage in for a shiny new one. That way, you can never really own anything…but at least you’ll be keep paying interest, pumping money into the market, and paying out nice commissions. (BTW, you can create an account to use this free calculator and learn what your investments are really costing you!)

You see, paying off your mortgage doesn’t benefit anybody but YOU. Banks make less in interest. Salesmen make less in their commission checks. But you – you get the benefit of having your house paid off. You get a roof over your head without thousands of dollars in monthly payments attached. That’s a monthly raise of 4 figures, and you get to decide how to spend it! Just think of the awesome vacations you could take with that much cash.

And, guess what; It’s not all or nothing. You can save for retirement and pay your mortgage off quickly…but you won’t hear that from somebody who wants to sell you something. Instead, they’ll try to sell you a shit sandwich and make you believe it’s a steak burger. I’m not buying it, and neither should you.

Some Debt is Good Debt

This money rule is a doozy: Some debt is good debt. That’s like saying some car wrecks are good car wrecks. Yeah….no.

Debt is debt is debt is debt... and it’s all bad. Like anything else, there are varying degrees of bad. Breaking your foot isn’t as bad as cutting off a leg, but don’t fool yourself. It’s still bad, right? The same goes for debt. Taking out a loan for college isn’t as bad as piling up $40,000 in credit card debt – but it’s still not great. The end result is the same. Whether it’s $40,000 in credit card debt or $40,000 in student loans, you still owe $40,000 to somebody else, and that limits your options.

When we began to understand this concept, we reached a big turning point in our financial lives. Once we stopped rationalizing our debt, we finally saw it all for what it was – a giant ball and chain holding us back from living the life of our dreams. Now that we’ve paid off everything but the house, we have so many more options. Instead of making those monthly car payments, we can save the money and use it for travel, retirement, or anything else we want or need. That freedom is something that debt will never allow you to feel.

Use 0% Offers When Possible

Using zero-percent offers may seem like a good idea. I mean, why not use somebody else’s money without paying interest? You get what you want and don’t have to pay extra for the privilege. Sounds like a win-win, right?

I used to fall into this trap all the time. I’d binge watch some HGTV and decide it was time to knock out a wall, upgrade the floors, and replace my kitchen countertops. So, I’d head over to Home Depot, plop it on my store card at 0% interest for a year, and head on my merry way.

Unfortunately, it was too easy. Because the purchase came without pain, I’d end up spending waaaay more than I planned. (Why not when there’s no interest for a year, right?) Worse, those monthly payments destroyed the power of my paycheck, limiting my options and making it harder to save. It took a while, but I finally found the best way to get a zero-percent interest rate: Pay cash. Saving up cash meant I could afford what I purchased, and I’d never have to worry about making payments again.

The 50/20/30 Budget

The 50/20/30 budget is a budgeting method that’s become very popular around the internet. It’s based on the idea that you use 50% of your take home pay on needs, 30% on wants, and 20% for savings and debt repayment. Sounds pretty logical, right?

Well, I don’t do trendy very well. Just ask Greg. My wardrobe consists of paint-stained yoga pants and holey t-shirts I bought for a quarter in my neighbors garage. So, if you want me to get on board, it better have more substance than just putting a flag over my profile picture.

Although I believe the best budget is the one you use, this one leaves a lot of room for error. There’s no specificity, which means its hard to find holes in your spending.

Besides, do you really need 30% of your income reserved for wants and only 20% for savings? I prefer to bump that savings percentage quite a bit higher. And if you’re willing to actually do the math for a 50/20/30 budget, why not use a zero-sum budget instead? This app makes budgeting AND tracking your spending automatic and easy.

Some Money Rules are Meant To Be Broken

If you don’t agree with my take on these money rules, it’s perfectly okay. I’ll just be over here avoiding debt, making the most of what I earn, and living my best life now while saving for the future. #sorrynotsorry

But if you want to get ahead, you might want to dig a little deeper. Don’t blindly follow everything you’re told. Do some research and decide what’s actually best for you. Then, act on it. A little bit of knowledge can help you cut through the hype and find the type of life you really want.

What do you think? Have I missed the mark? Are there any money rules you won’t follow? Let me know in the comments!

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  1. My vote is to eliminate all debt ASAP–and for us that includes our mortgage. I know many early retirees don’t mind having a mortgage since technically a home is an asset, but I want as few bills as humanly possible.

    I also don’t agree with many of these money “rules.” At the end of the day it comes down to doing what works best for you. Many times the math favors breaking the rules. You do you. 🙂

    1. I agree. Do what works best for you, and be happy! That’s what life is all about.

  2. I have to agree with…all of these!
    “Breaking your foot isn’t as bad as cutting off a leg, but don’t fool yourself. It’s still bad, right?” lol Yeah, still bad. I’ve never understood the “some debt is good debt” belief. I’ve been debt free now for about three years and it is the best feeling ever.

    1. Yep, ask anyone who is debt free if they miss being in debt. You’ll get a big fat NOPE!

  3. Someone actually said I should invest in bitcoin. LOL. Uh no! Why?! Just no.

  4. You havent missed a thing! Im right there with you on all of these. I think its pretty safe to say that its okay to use some common sense and follow money rules that aligna with your values versus blindly following the masses.

  5. I love the passion in this post, Holly.

    We were hardcore debt-averse people when we first got into personal finance, all the way through to paying off our mortgage. When we were finally done with all our debt, we became intimately familiar with opportunity costs. Paying off our mortgage avoided 4.25% interest while the market was returning double and triple that. And our results weren’t atypical. Over a 30 year period, there has never been a time where you’d be better off paying extra on a 4.25% mortgage instead of investing in the S&P500, at least if we’re just talking dollars and cents.

    But emotions play a role too and, yes, being completely debt free does feel very good.

    Still, the good should never be the enemy of the great. If paying down a mortgage is motivating, you may do much better overall (i.e. – you find a way to throw an extra $200 every month to the mortgage, but wouldn’t do the same for investing for retirement).

    And luckily, most of us can’t help but be doing both when you own a house. Every month, you both pay down your debt, even if you’re just paying the normal monthly payment. And hopefully, we’re all investing as well. As you said, it doesn’t have to be either or.

    1. Opportunity costs – smeh. It’s easy to talk opportunity costs with the stock market performing the way it has. Someone making the same calculation in 2008 wouldn’t be so sure. But I agree that, over decades, investing wins.

      I also agree it doesn’t have to be either/or. The main reason we prepay our mortgage is because we invest so much already and have extra money every month. Might as well. If our money were tighter, I would probably still do both – just not with quite the same fervor.

  6. I’m with you on the debt freedom. Could I make more money over the long run by investing, rather than aggressively paying off the mortgage? Yes. But there’s three reasons I do it anyway – (1) I’m still saving for retirement and college, my two other big goals; (2) freed up cash flow for investing, financial independence, and paying for college; and (3) the security of owning our home. Yes, I’ll still have to pay property taxes but my annual expenses will drop by tens of thousands once the mortgage is paid off. I’d much rather have that peace of mind than the latest thingamajig that my co-workers are buying.

  7. The most important rules to follow are you own. There are so many factors that put the \”personal\” in \”personal finance\” that hard and fast rules are hard to come by.

    Personally, I remember what it was like to be debt-free and am looking forward to paying off my mortgage and regaining that freedom. That said, once I do that, I can easily see myself buying investment real estate using a minimal mortgage to finance the property. It\’s a way to jumpstart the snowball of property acquisition.

  8. Financial Freedom says:

    Great article! Totally agree…especially about the mortgage and the “some debt is good debt” nonsense! There is no better freedom than knowing that the only person you have to pay each month is yourself!

  9. Kevin Payne says:

    Can you clarify what Dave Ramsey debt advice you are referring to that you didn’t follow. Going through his book (and yours too) right now.

    1. Kevin Payne says:

      Thanks in advance for your help.

    2. Hmmm… I think that was a poorly worded sentence that was meant to refer to credit card rewards. I probably mucked up what Holly said when I edited.

      Frankly, Ramsey’s advice on getting out of debt is spot on. It’s pretty much the same advice we give. On the flip side, we have several disagreements with him about investing, credit cards, and lifestyle design. But, if your only goal is getting out of debt, his advice is great.

      1. Kevin Payne says:

        Ok, thanks. I was thinking the travel hacking didn’t line up with his philosophies. In the post, though, you said “If I had listened to Dave Ramsey’s advice on debt, for example, I’d still be schlepping away in an office, working every day to pay off junk I couldn’t afford in the first place.” Not sure how listening to his advice on debt would cause that. Is that where the lifestyle design comes into play?

        1. Yep, it was a mistake. The sentence was clunky, got blended with another sentence during editing, then didn’t make sense.

  10. Mommy Jhy | www.myfavoritelists.com says:

    Hmm… we do not have an emergency fund. And, we don’t co-mingle our income/ money.

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