Reddit is a goldmine for personal finance stories, but it’s also a place where bad advice gets shared, and sometimes followed. Threads on r/DaveRamsey and r/CalebHammer asked users to share the worst financial advice they’ve ever received and the responses were eye-opening.
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Here are some of the most damaging advice shared in that thread and what to do instead of following that advice.
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Finance a Car To Build Credit
One of the most common pieces of bad advice is to take out a car loan just to build credit.
“For me, it had to be to finance a car because I could build my credit. However, I did not do that but instead bought a car with $160k miles for $4700 and pocketed about $1500 after registration was done [sic],” one Redditor by the username u/[deleted] wrote.
What to Do Instead: You don’t need to go into debt to build credit. A secured credit card, used responsibly, can help you establish a credit history without the burden of a car loan. Becoming an authorized user on a family member’s credit card can also help.
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No Need To Save When You’re Young
Another Reddit user reported being told that saving money isn’t important when they’re young.
“[I was told that] saving doesn’t matter when you’re young, because the money you’ll make when you’re in your peak earning years will make the early savings irrelevant. Lived like that through my twenties. Pretty much spent everything I made. Now in my thirties, and not really making what I thought I would be at this time in my life,” the user u/WORLDBENDER wrote.
What to Do Instead: Enjoying life while you’re young doesn’t mean you should spend all your money and not prepare for the future. Take advantage of compound interest and start saving and investing money every single month to build a solid financial foundation.
Max Out Federal Student Loans — It’s Cheap Money
Most students are encouraged not to take out too many student loans, but one was told to take out as much money as they could.
“[I was told m]ax out your federal student loans. It’s the cheapest money you’ll ever borrow,” user u/napashadow explained.
What to Do Instead: Only borrow what you absolutely need for tuition and essential expenses. And before taking out student loans, make sure you’ve looked into scholarships, grants and work-study programs. You can also consider going to a community college for the first two years to save money.
Take Out Loans To Buy Crypto
A user said the worst financial advice they ever received was to take out a loan to buy cryptocurrency.
“[I was told t]o get a second mortgage on my house to buy dogecoin,” user u/gumercindo1959 wrote.
What to Do Instead: Using debt to chase quick gains can easily backfire and leave you underwater if the market crashes. Instead, only invest money you can afford to lose, and build wealth by diversifying your portfolio with less volatile options like index funds.
Treat Credit Card Spending as Free Money
Another person said they were advised to use their credit card as much as possible to earn rewards.
“The more you spend with your credit card, the more money you make,” Reddit user u/[deleted] wrote.
What to Do Instead: Credit card rewards are great, but they’re definitely not a reason to spend more than you normally would. If you’re racking up debt just to earn rewards, you’ll ruin your credit score if you fail to pay it back. The best way to use credit cards is to use them for stuff you were already planning to buy and pay your balance off in full and on time each month.
Fall for ‘Buy Now, Pay Later’ Traps
Another user shared the bad advice they got about stretching out payments just because the option was available.
“[I was told t]hey’re letting you pay it over 12 months, why wouldn’t you take that deal?” u/Honest_Grapefruit259 wrote.
What to Do Instead: Just because you have the option to pay something off over time doesn’t mean you should. ‘Buy now, pay later‘ plans can make it easy to overspend and lose track of what you actually owe. Plus, those monthly payments add up fast and missing one could come with fees or hurt your credit. If you can’t afford to pay for something upfront, you may want to reconsider the purchase altogether.
Ultimately, Use Your Discernment
You shouldn’t take financial advice from just anybody, especially when it comes to your finances. Just because a friend, family member or random Reddit user recommended something doesn’t mean it’s right for you. If you need help making a financial decision, reach out to a certified financial advisor who can give you advice based on your specific situation.
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This article originally appeared on GOBankingRates.com: The Worst Financial Advice on Reddit and What To Do Instead
