Join Scott & Nikita for this off-beat episode, sharing some of the best & worst financial advice received by those who are part of the 3rd Decade community.
Some topics covered in this episode pertain to:
We hope you enjoy this episode & feel a sense of relief that you are far from the only one who's heard some outrageous financial advice (and that there really are people out there that give good advice, too!).
Join Scott & Nikita for this off-beat episode, sharing some of the best & worst financial advice received by those who are part of the 3rd Decade community.
Some topics covered in this episode pertain to:
We hope you enjoy this episode & feel a sense of relief that you are far from the only one who's heard some outrageous financial advice (and that there really are people out there that give good advice, too!).
How's it going, everyone. My name's Scott Bennett,
Nikita Wolff:I'm Nikita Wolff,
Scott Bennett:Today we're doing something we've never done before and really different, but we're really excited about we're talking about best and worst financial advice that people have received. So, Nikki, do you wanna touch a little bit on how we got all of this data we're about to jump into?
Nikita Wolff:Yeah, so we sent out in our email as well as across our social medias, um, to the third decade community to submit the best and the worst financial advice they've ever received. We did see some trends once they started trickling in.
Scott Bennett:Yeah, for sure. The trends were, were a really interesting piece. And, u m, so first of all, thank you to anybody who, w ho submitted a topic or submitted a story. U h, i t, it was really eyeopening for us. Some, u h, some funny stories that, u h, that we've chuckled a t and some downright scary stuff too, that we'll, dive into. So we're gonna start today with some of the worst topics we, we saw. A nd interestingly u p, there w ere three things that got brought up quite a lot, and, and there, there was a kind of a trend there in terms of, of bad financial advice that we, that, u h, participants and people had heard. U h, and those three things were student loans paying down debt versus investing and credit card. So N ikki, why don't you, you start us off with the first student loan story.
Nikita Wolff:Yeah. So this person shared that they were told to get a lot of student loans so that they didn't have to work in college. I feel like I've even heard that kind of passively, and that's really how you end up like, kind of maximizing your lifestyle and then graduating and getting your first job and realizing that your student loan payment is something that makes it really impossible to feel like you can even meet your savings goals. And it just feels like this monstrous beast kind of that you're trying to enter adulthood with. So, yeah, I'm not surprised by that one, sadly. No, but glad that it's new better.
Scott Bennett:Yeah. And it's something that I think, uh, quite a lot of people here, I, this one to me falls into one of the topics of like, it, it's probably not the best advice as, as we've said, but it's, I think it's pretty well intentioned. I think for some people, um, especially, you know, first generation college and, and stuff, maybe the parents didn't go to college. There's so much invested and, so much pride in everything into going to college that parents and whoever else might be giving out this advice might say, no, your job is school.
Nikita Wolff:They wanna sure to graduate, make sure you get good grades, et cetera. I think there's a balance to be had though. Cause I think if you just instead rely on student loans, like even when I took, gosh, I think it was like 21 credit hours. It was quite a bit, one semester I had just a part-time job to help supplement a little bit. And yeah, I do think it's possible.
Scott Bennett:And to your point, like of, that, that lifestyle creep, that's a, a huge thing to look out for here because student loans are pretty easy to get. Um, yeah. Especially if you start diving. Yeah. Especially if you start diving into the private student loan world and uh, almost too easy to get.
Nikita Wolff:And also The hardest, uh, debt to get rid
Scott Bennett:Of. Yeah. So I think the idea of, of that lifestyle creep that you said is, something to be really mindful of and, and getting a ton of student loans. Um, so you don't have to work at all. Might, be, might be a little bit shifting, u h, the pendulum a little bit too far, one way. The second part on student loans that we saw is in the same vein. U m, and it's, it's kind of, u h, a little bit the same topic, but it's take all that you can because you might need it s omeday. So, you know, even thinking after school, take all the student loans that you can, because you might need it after s chool and need,to live on that m uch. M e, that that's not how that should work. Right. I t should be a k ind o f a last resort thing that you're doing any loans and, and yes, the interest rates might be lower than something else you can get, but taking all that you can, u h, there has to be some more balance there.
Nikita Wolff:I, yeah, I think it also plays in dangerous territory, where if you have$20,000 sitting in your savings account for loans that you've taken, but not needed more often than not. I think someone's gonna feel like their money's burning a hole in their pocket and they want to spend it on something, whether it's, you know, a down payment on a new car or whatever, they're very rarely going to set it aside for an emergency. And then one day just like, you know, pay off the student loans cuz they didn't end up needing it. They're they're going to just be taking out more debt than they had needed in the first place.
Scott Bennett:Yeah. Very, very good point. So the, the second topic we saw a few different comments on was paying down debt versus investing and, and this one, um, it's, it's funny because everybody's a little bit different here. We we've talked about it before, but some people are super debt adverse and some people really, uh, you know, that, that is the, the last thing that they want is more debt. Even if it's quote unquote good debt, um, low interest rates, you know, uh, flexible payments schedules, things like that. It's still, uh, some people, people are, are very, very diverse. So this one is a little bit more, uh, gray area than, than some of the other ones in terms of yeah, it's the, the advice that people receive might not have been right. But there is some truth to it. I would say.
Nikita Wolff:Yeah. This one, I, think it depends who you talk to because mathematically, um, is different than what some people would feel emotionally. So this person, uh, responded that they were encouraged to put double payments on their mortgage that had a 2.3% interest rate Some people just wanna paid off house, which I understand and can get behind to some extent. But if you would otherwise be able to invest that money, 2.3% versus an 8% return in the stock market over a 30 year period, it mathematically would make much more sense to be investing that money instead of paying off your mortgage early.
Scott Bennett:Yeah. It's also gets into the, to the same point of, uh, you know, putting all your eggs in one basket, right? Yes. There's something to be said about having a, house to yourself, but a lot of people are here with that kind of, uh, scenario they're super into and real estate as an investment right. Oh yeah. Put all of this into this because then you'll be able to sell your house for X and, and make all of this money off of it. Um, it's one thing to do it because you're debt diverse and you wanna pay it off house. It's another thing to do it as, as an alternative to investing. When we look at that kind of calculation, as Nikki brought up 2.3% is what we would like, what we call cheap money, right. That you're not gonna get that interest rate on, on almost anything else, uh, in terms of being able to borrow some money. So sometimes there is a trade off between being diverse and making kind of the right financial decision. Mm-hmm<affirmative> the next one here was, u h, was a really interesting one a nd, a nd k inda f unny.
Nikita Wolff:It made me laugh.
Scott Bennett:Yeah, yeah. Me too. It was to leave cash hidden around the house. U m, because i t i t's, it's a nice surprise to find it. So again, this one was more on the saving than investing side. U h, somebody said, you know, to the extreme, just leave cash h idden i n a round the house. And, and you know, when you're doing laundry, it's nice to find 20 b ucks in a pocket a nd, a nd just hide that somewhere else. U h, not, not great. W e, tend to t end to think that, you know, like the, th e k i nd o f e very dollar philosophy that you're, you're being, you know, a good steward of money and yo u're, you have a plan for it.
Nikita Wolff:I think it's better to know where all of your money is. Yeah. I have had that had a moment where I found like a$20 bill, or maybe even two$20 bills in like a jacket pocket. And I was like, wow, this feels great. Yeah. But that's not something I'd wanna do all the time. Cuz then how many twenties do I have laying around that I could instead be actually doing something productive with.
Scott Bennett:Exactly. Exactly. Okay. So this next example is a little bit more investing than savings, but this person shared the worst financial advice they'd ever heard was actually given to their youngest sister. She graduated from high school and was clueless about finances. She didn't know how to make a budget, didn't know how to pay utility bills and money was and is a taboo subject in their family. So she built up the courage to approach her father and asked his financial advice. And his response was to save up a thousand dollars and then invested doesn't matter what she invested in just to invest the money. Oh, there's so much about that to unpack the first one being there are so many other tools kind of to get in place first with the budgeting and whatnot, but as well, uh, to have an emergency fund, if I was to tell someone to save up a thousand dollars, I'd say save up a thousand dollars, keep that to the side and then start investing definitely does matter what you choose to invest in though. Yeah. Um, that one was pretty good. Yeah. Another, another one that like probably the right, um, right. Intentions. Right. And, and kind of has the right start early. You know, we talk about it all the time, but there has to be some scaffolding in place that emergency fund, as you brought up some of the budgeting tools and, and things like that. And then, but the kicker was you, you know, it doesn't matter what it, what it's invested in, as long as it's invested, uh, right. Investing means a lot of different things to a lot of different people and right.
Nikita Wolff:If you've invested a thousand dollars in game stop last year, you would have very little to show for it now.
Scott Bennett:Some people did. Yeah. Yeah. Some people did so cool. Um, the last topic that, that we saw, and this was actually a topic we saw the most things about and in my eyes had the most alarming, uh, responses, um, was around cards overall. You know, we kept hearing this idea that people were told you need to keep a small balance to help build the score.
Nikita Wolff:I even was told that growing up, I, until I went through 3rd Decades program, that was the impression I was under, but I just didn't want to do that. Cause I was like, well, I don't want to have to like pay them to get a good credit score, but I know people who have intentionally kept balances and paid interest rates so that they could quote unquote, improve their score. And instead they're just hurting their score.
Scott Bennett:Yeah. Yeah. Two of the examples on this, uh, speaking to that, that piece of advice were actually from high school teachers in a personal finance its class relaying that message. So that leads me to believe it's, it's a little bit more of a widespread issue that needs a lot of education and stuff on, you know, credit. It, it always, uh, I always take it for granted, I think, because it, it doesn't seem like one of the more, uh, complicated topics that we discuss in terms of the 3rd Decade. But it is the one I think that we get the most questions on when we're talking about it in class and things. And, uh, it it's, it's because of this misinformation and it's because there's a lot of anxiety and, uh, mistrust and everything else around the credit system. And so that's where, you know, ideas like this can spread. And just to back up a little bit, you know, people were told you go, and you, you spend a thousand dollars on the, on a credit card. You don't pay that off. You just pay the, a minimum balance. And, and that's how you build credit mm-hmm<affirmative>, which then you're paying those extremely high, uh, interest charges. So in order to not take it for granted, you know, I, I just wanna be clear, you can go and spend money on a credit card. And the, the, the process should be that you pay that card off to the fullest each and every single month, I've had a credit card for a very long time. Um, besides some time, right after college, I don't think I've ever paid interest on that card ever. Mm-hmm<affirmative> uh, and it builds up my credit, cuz I, you can pay it off. Yes. That 27% interest rate or whatever it is, freaks me, me out. Um, but you, you do not have to use that if you pay it off every month.
Nikita Wolff:Yeah. If you play your cards, right. You can make money having a credit card and not end up spending any extra money. Right.
Scott Bennett:Right. And then we, we also had a few, so those student loans paying down debt versus investing in credit cards were kind of three topics and three pieces of pieces of advice that we kept hearing and seeing over and over again, we then had a few that we just wanna include in there because uh, some of them are, are good and I think relevant and kind of funny. Um, another ones are, are just important. So one of those examples that actually spoke to me when I read it, I went, oh, I, I got this piece of advice was go out or, you know, right after school, uh, this person was, was in a sales job and go out and buy a really expensive BMW or expensive car that the more you look like you're successful, the more people are gonna believe you're successful. Person went out and did it, uh, ended up being a two door car. And, uh, a few years later was out of that business, but still driving that car because was not worth what they paid for it. And, uh, was strapping around a baby in the backseat. I was told that when I was, I was told that when I was in, in sales myself, um, that exact thing, Hey, go out, you need, you need, I was told by manager, you need a nicer car. If
Nikita Wolff:You're you need to look the part. Yeah, yeah. This is something that I, I see people do. I see it in people who are selling MLMs, especially. Yeah,
Scott Bennett:Yeah. Look the part, uh, which, which has so, so, so many problems Associated with it. It is, that is how the keeping up with the Jones is mentality continues to go on some of the most successful people I know could care less what car they drive, it's on it. It's, uh, it's, it works and it's running and, and everything else. Yes. You, you want something that's dependable, that's safe and stuff like that. But, uh, this one was, was something that I think a lot of people, especially young people deal with because it's kind of your entry into, into that, that consumer world.
Nikita Wolff:Yeah. Definitely another one that I, uh, appreciated seeing was dogecoin. Uh, the advice that they received was it's gonna be big invest in it. Um<laugh> so then they said that they bought, uh,$5 worth of DOJ coin as a joke at 2 cents a share after seeing a 300% return on investment in four months, they decided to buy$200 worth right at the peak. So I'm guessing that did not end well for this person. I'm sorry, but yeah, this is another good example of not listening to trends.
Scott Bennett:And, and at the end of the day, the$5 worth is kind of funny. And, and then, um, you know, to throw even$200 at it, but unfortunately people were throwing life savings and, and still are into, into some of this much more speculative stuff under the guise of getting rich fast. I know something else that everybody else doesn't know and, and I'm gonna do it also that, you know, people are, are talking about on social media and<affirmative> at the same time begging me to buy. Uh, it's, it's pretty funny. Um, and it, but as funny as it is, it, it can kind of ruin financial plans and, and really set people up for, for some really hurtful financial decisions down the road. Yeah. Yeah. Um, the last last example we're gonna touch on, on, on some of the worst advice is, is a, is a pretty scary one. But somebody wrote in that their mom was told to take her social security at age 62, because she would never be able to make up the difference if she waited to take it. Um, so this was somebody who wasn't planning on retiring slash couldn't retire at, at 62. Um, and would, would've taken that amount when you do that. When you take social security before full retirement age, it decreases its value by 8% each year. Um, and at the same time, you can right now with current rules delay to take it till 70 and by delaying to take it until 70, especially if she still had to work until 70, that would automatically raise by 8% a year. So it would've totally changed her retirement outlook because this is somebody who needed social security in order to, to have a retirement and a comfortable one. And it's, it's the, that's one of those scary ones that man, a, a lot of, a lot of pain. Yes. If, if that person morbidly dies at 72, that person who told them to take it at 62 turns out to be right. But if they live till 90, it's, one of those things where you never know exactly what's gonna happen, but if you wait to take it t ill the f amount, you have much this person, especially in her story, h adn't had a much better chance of success.
Nikita Wolff:Right? I think it just goes to show if, if somebody doesn't know the details of your finances, you should, should not listen to the advice that they give to you, cuz yeah.
Scott Bennett:Yeah. Blanket, blanket, financial advice, uh, especially for an important decision like that with zero background, usually not the best thing. So yes
Nikita Wolff:<laugh> All right. So as far as some of the best advice we received, I'm gonna touch on this first one, cuz I love this one to, um, FI/RE, to do FI/RE now, for those of you who aren't familiar with it, the fire movement stands for financial independence retire early. It's the concept that by investing a lot of your money, some of these people are doing like 40 to 60% and up of their income, you can shave decades off of your retirement age. Yeah.
Scott Bennett:FI/RE is something that has, has gained so much popularity and traction for good reason. And I think, uh, the people who I talk to who are super invested and into it, aren't telling me, oh, I'm never gonna work again at 45 or 50. Right. Mm-hmm<affirmative>, I'm I'm gonna use those years and never work again. It's no, I, I want to have that freedom to say, I can follow a passion project or I can, I don't have to work, uh, up until age 70 or 80 just to be able to survive. It's it's a really, really cool thing. I think sometimes it gets a bad rap because you have a bunch of people saying, oh, I'm, I'm never working again after 40. Well, what are you gonna do? I, the people I know who, who subscribe to this are not in that boat.
Nikita Wolff:They just get to do things that they love instead. Or yeah, I think about myself if slash when, I'm able to retire early. I look forward to being able to like do things strictly for the fun of it and if it makes me money. Cool. And if it doesn't, I'm already set. It's fine. I think the at that, and then on top of that, whenever you invest early on, as we talk about in our curriculum, like just starting at 23, rather than 40 it's so massive. The differences that those years give you for compound interest that you might find yourself in a place when you're 28 where you're like, I hate my job. Yeah. You can walk away from it and take a short little break because you have done so much of that investing on the front end that you have the freedom to do. So it's kind of like you're buying back your freedom a little bit.
Scott Bennett:Right? Right. And, and as long people can, like anything else, people do take it the, to the extreme, they can take it to the extreme. It is not best for everybody. Um, I am not a, a FI/RE person right. My, I have kind of retirement as normal retirement or a little bit early at eight 60 when I run my models and my wife and I talk about our projections and plans and stuff. Um, but for some people it is amazing. And as Nikki said, it's, it's, you've afforded yourself the flexibility, your hard work and stuff early on. Um, it has afforded yourself that flexibility. So it's really cool to see, you know, in that, in that same vein, cuz you already touched on it, a few topics or a few people touched on the, the advice and some of the things we teach in terms of start investing for retirement with your first paycheck. One response that I really liked was,"start small, start early and just start." A nd in terms of saving, have a plan, u m, you know, a nd, and it's not, it starts with saving right. And, a nd living know within your means, if you're able to and, and doing that and getting into those habits pretty early, some people are fortunate enough to get that, u h, get that little lesson early. Some people, u m, are fortunate enough to, t o have seen it happen and, a nd t he, positives t hat, that come with that. So that's cool to see.
Nikita Wolff:Yeah, I like this next one we saw just to max out your Roth IRA and your other benefits. I've seen several examples of people who didn't know their employer had a match for their 401k, even like if we're jumping over to that type of retirement account and because they look into it, then they realize they were missing out on free money and now they don't have to be missing out on that free money so they could invest there. And if they have the means, I mean, you could, you could max out your 401k if you have, uh,$19,500 to be able to do so, um, and get that employer match. Um, but just to be able to max out those, those different retirement accounts, it can make such a huge difference in your retirement if you do
Scott Bennett:That. Right. Right. And all the benefits, uh, as we've talked about with Roth savings as well for young people, especially, um, you know, that it's, it's cool to see that people wrote that a few times in terms of some advice that they've received. Um, I think more and more people are hearing about it, which is cool. The next one is the other one that I was happy to see, which is a, something we preach all the time, set it and forget it, you know, mm-hmm,<affirmative> um, it is not the most exciting investment strategy in the world. It is, uh, you know, you're not gonna be talking about the most recent Bitcoin price or, or the hottest stock tip at, at your next party.
Nikita Wolff:I will say it's the most, it's the most peaceful type of investing<laugh> I was honestly, it is so nice not thinking about like, not even losing track of the days, because I have so much of my finances automated, not realizing until maybe six days after the fact that I've already contributed for the month to my Roth IRA, cuz it just happened in the background. I didn't have to think about it or remember it. Oh, it's so nice. So yes, set it and forget it.
Scott Bennett:Right, right. And, and get those, you know, make it personal, make it within your own goals, which is huge. The next one, Nikki, I think you can touch on, which is paying cash for your car and driving it into the ground.
Nikita Wolff:Yes, yes sir. This was my contribution to the best financial advice I ever received. Mm-hmm<affirmative> I bought my car 10 years ago. It is a little bit of a joke, uh, how small it is Scott and I both actually drive two door Honda civics. And somehow mine is like still half the size of his<laugh>. Um, but it's really funny because I will like take my nieces and nephews for a ride and like strapping a car seat into it is a literal joke. So kudos to you, Scott, even trying, I'm glad your family has another car for your normal commuting, but. Yeah. Basically just to buy it in cash and drive it into the ground. So I've just done regular maintenance on it, paid somebody that I know personally to, to like do any of the work on it that I couldn't do myself. It's old enough and small enough that I can actually do some of the work myself and gain some skills along the way. But it has been so inexpensive. It's hilarious. Um, as a side note, my husband will not happily ride passenger in the car cause it's so small that his head literally like presses to the ceiling, but I bought this car in high school and I still driving it. I'm worried I'm gonna be driving it when I'm like 35, too. Like I'm almost hoping eventually here it gives out on me, but yeah, for now it, the feeling it's been really nice.
Scott Bennett:I know the feeling with ours, you know, um, kind of the same thing. It, I had never not had a car payment before I paid off this, this tiny little car. And when I did that, it, in the same vein as like, oh, you, you want something new and stuff. There is, it is almost impossible for me now to, to like look at a, car payment at a second car payment and say, oh yeah, I want that. Like h ave h aving, having a, not having a car payment each month helps a lot. Now there are days talk to me when it's 111 outside and I have to pick up one of the girls and like climb into the b ack s eat of the car i n order to do i t. It's that trade o ff. But at the same time, you know, we've kind o f, we've said, Hey, if, if it's important e nough for us to, t o get a new car, u m, that is bigger o r whatever, we're gonna make room for that in our budget. And i t, a nd it allows us to, t o look at our, u h, our priorities and, a nd that i t, there are some days where it creeps up much higher on the priorities list. U m, but we, we are fortunate enough to be a ble to say, Hey, yeah, let's, let's, let's drive this one until we can't any longer. F or s ure. And, a nd just try and be strategic around sharing.
Nikita Wolff:Um, I think the, the big moral of the store here is too, don't buy a car with two doors if you ever plan on having kids.<laugh>, I'm sure there are people that I know that are driving, you know, 10, 20 year old cars that are still really comfortable for their family actually, because they're just more spacious cars. So maybe our example is kind of bad, but
Scott Bennett:Yeah, I could, I could go into the, the bad decisions and not this wasn't even advice. It was just a bad decision that, uh, 22 year old me made, which was, you know, getting convinced by the brand new two door instead of the used four door<laugh> anyway, w e can, w e can move on, u h, w e're we're i n t he, we're in the best topics piece, u h, o r best piece of advice of this podcast. And the last one was our favorite out of all the, it was s igned up for 3rd Decade.
Nikita Wolff:There we go. Honestly, as cheesy as it sounds, we hear it consistently every semester as students send in their feedback, they're like, I'm so glad I was here telling all my friends about it. So I was happy to see this one pop up on the list too.
Scott Bennett:Yeah. Yeah. And it reminded me to, you know, please continue to tell friends, family, people, you think it into this program. I have personal friends, who've gone through it. It's made us discussing money so much less taboo and, and they can come and talk and everything about what they learned. And that's one of the huge goals of this. So, uh, if that's a good piece of advice that, you received, please do it to a few other people because that that's the whole mission here. So, uh, I hoped you all like this, thanks so much again to everybody who, who replied to us, we didn't get to get to all of the, uh, the advice that, that we received from people, but it was a really fun and, eye opening thing to read through all the responses.
Nikita Wolff:Agreed. If you have any topics that you'd be interested in having us cover on the third decade podcast, please send them in to info. third.org. Hope you all are having a great week and we'll talk soon.