The 5 Worst Pieces of Financial Advice You Could Possibly Follow

The 5 Worst Pieces of Financial Advice You Could Possibly Follow

4 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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Conventional financial advice can lead you in circles. At best, it will get you conventional (aka average) results.

Considering that most people in America who believe these widely accepted nuggets of wisdom don’t even have $1,000 in emergency savings and have little hope of ever being able to afford their own home—let alone have any real level of income in retirement—you might want to rethink some of them.

In my experience, the following are some of the worst and most damaging pieces of financial advice.

Warning: Be Skeptical of this Financial Advice

  1. You Need to Go to College

I went to college. I don’t think I learned much of anything useful in life and making money. The biggest thing you’ll probably learn if you go down that path is how much of a massive burden student loan debt is.

There are certainly smart people who have continued their education to become doctors, lawyers, etc. Some have even started great companies.

Yet, ironically:

  • Most of the biggest success stories are of those who dropped out.
  • If you do the math, the return on a degree is now so low, no investor would want to make that investment themselves.
  • Millions of students are graduating, only to find they need to borrow more to go get retrained to be able to actually get a job

Do keep learning. If you want to go to college as a way to make connections or as a luxury, then get out there and invest in real estate first. After that, use your profits to pay for your formal education and a paper degree later.

Related: Is a College Education Financially Worth It — Or Is It a Giant Scam?

is-college-worth-it

  1. You Must Pay Off Your Debt as Fast as Possible

It may feel great to be deb- free. Though billionaires sleep very well owing billions of dollars, too. You don’t want to waste money on high interest, bad debt. Yet, you may find a better use for your money than eliminating all your debt.

The deciding factor is really whether you can make more money by investing first. Say you’ve got student loans at 5 percent interest or a credit card with a 0% interest rate. If instead of using your cash to pay that off, you could go make 8 percent in a passive income property, 38 percent on a house flip, or more on a wholesale deal, why wouldn’t you invest first?

Take part of your gains and pay down part of your debt; reinvest the rest. Repeat.

  1. Pay Whoever You Owe First

The average way to do things is to get your paycheck, go splurge, pay all the bills, and then if you have anything left, invest or save it.

Of course, most of the time, there is nothing left. So you never invest. You never get ahead. More often you are borrowing extra money, because you are living beyond your means.

Instead, pay yourself first. You’ll find a way to cover the rest. This might mean setting aside money to invest right off the top of your check, no matter what.

The best return you can make is investing in yourself. Use it to learn a skill that will make you more valuable.

  1. Save, Save, Save

It is true that it is wise to have some emergency reserves. You don’t want to ruin everything else you’ve built for the sake of making the bills one month. Don’t put off investing or learning, but do try to build up some emergency reserves.

Three to six months of expenses is a good goal most have. That way if you ever get sick, can’t work, or your income gets tied up, you’ll be just fine. If you’ve got three to six months of expenses in the bank or under your mattress, and maybe access to a couple thousand dollars in credit, then anything more is probably a waste.

Leaving cash idle is worse than a risk. It is always going down in value. Plus, who knows what’s going to happen. A bank glitch or fire can vaporize it in an instant.

Invest, invest, invest. Especially in assets that go up in value, instead of down due to inflation.

male showing empty pockets implying moneyless

Related: Money Saving Tips: Not Enough Money to Invest, Think Again!

  1. All Debt Is Bad Debt

This is simply not true. There are two very different types of debt.

One is bad debt. That is used to buy depreciating items and more debt—like a brand new car. It’s crazy to take out a big car loan on a brand new car for it to immediately go down in value, plus demand gas, oil changes, insurance, and annual registration fees. Plus, you might have to pay to park it. That’s a bad debt.

Contrast that with using financial leverage to invest in real estate. For example, financing a house to flip. You might use a hard money loan and be charged interest at 10 percent a year, but you can flip that house and make 30 percent in a month. Now that’s smart.

Or you can borrow money at 5 percent to acquire a rental property that pays you every single month and gives you a 20 percent return every year. It will likely also go up in value over time. It’s basic math.

The Bottom Line

Be wary of mass media financial advice. Do not apply it blindly—not unless you want the average results others (who are probably broke) are getting with them.

You don’t even have to be good at math to figure out how much sense going against some of this conventional advice makes. Think about it for yourself. Use a calculator if you need to. Then make truly smart money decisions.

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Have you followed any conventional financial advice that you later regretted?

Let me know in a comment below.