Show 13 - Guaranteed Ways to Go Broke
Today's guest is Barry Choi, a personal finance expert who writes on his Moneywehave.com website. Barry learned the hard way that you can't blindly follow advice from "financial professionals", because some of them are just out to "make a buck"; they are not always acting in your best interests.
Barry's recently wrote article an article titled Guaranteed Ways to Go Broke, and on the show he summarized his top tips for going broke:
Tip #1 - Have too many credit cards. Barry is a travel expert, so he travels a lot, so he has a credit card just for foreign travel so he gets a better deal on foreign exchange. He generally uses two different cards, a Visa and a Mastercard, so he's protected if there's a service outage at his credit card company. Beyond that, there is no need to carry multiple credit cards.
Tip #2 - Ignoring your current situation. You must understand the interest you are paying on each of your debts. As Barry says on the show:
A lot of people who run into debt issues, they just don’t get what’s going on. They think debt is a way to enjoy life. Or that’s what they’ve been told. So, they don’t mind charging everything to their credit cards and then paying that low monthly interest. But at that low monthly rate you’re still paying 20 percent plus interest. If you’re running, let’s just say for argument sakes, ten grand worth of debt, you could be paying that off for 50 years if you’re just making the minimum payment, if not longer.
Paying for 50 years is never a wise financial strategy.
Tip #3 - Keeping up with the Joneses Every financial book tells you not to worry about the car your friend is driving, but Barry still sees this as the most common financial mistake. Live your own life; don't try to keep up with anyone.
Tip #4 - Spending money (you don't have) on presents. It's great to buy presents for your friends and family, but by spending a lot they may also feel obligated to spend a lot as well, and that's not good for anyone. Concentrate on spending time with each other, and save money.
Tip #5 - Buying Too Much House. We all want a nice house, but only buy what you can afford. It's not just the mortgage, but all of the other costs that you must factor in to your budget. If you want to raise a family, you will have costs over and above your mortgage payments. A proper budget is very important.
Resources Mentioned on the Show
- Barry Choi's website: Moneywehave.com
- Barry's article we talked about on the show: Guaranteed Ways to Go Broke
Books Barry Recommends:
- Stop Over-Thinking Your Money!: The Five Simple Rules of Financial Success by Preet Banerjee
- Wealthing Like Rabbits: An Original Introduction to Personal Finance by Robert Brown
- Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School by Andrew Hallam
Click here for a full transcript of Show #13 - How to Go Broke with Barry Choi