financial advice

“Buy low, sell high” and “Live within your means” are indisputably some of the best financial advice of all times. They’re also pretty obvious. But the worst financial advice ever? That can be much harder to spot. So let’s make this simple. Here is the worst financial advice ever according to the experts:

If you’re low on cash, default on your mortgage

This very bad financial advice is making the rounds:  “Strapped for money? Pay your credit card and neglect your mortgage.” Don’t do this! Your first responsibility should always be absolute necessities. Food comes first, then the utility bill, then meeting your rent or mortgage obligation. If you don’t pay the mortgage, the consequences are awful. Once it’s 120 days late, you move from default to foreclosure, which literally means packing your bags. A foreclosure stays on your credit report for seven years and you also incur a tax bill for the amount between what you owed and how much the mortgage company raised by reselling your house. If you don’t pay your credit card bill, in contrast, you may end up having the card canceled and paying late fees or having the account go into collections. These can all hurt your credit rating, but they won’t threaten the roof over your head. And there are a lot more options for credit card debt settlement and consolidation. Once your house is gone, it’s just gone.

Open the windows when it gets blazing hot

It seems like frugal advice: Sweat it out and save on your AC bill. (Or wear a parka in the house in winter.) But you can actually hurt your health and your energy level by suffering in the heat. Allergies are one issue. Extreme temperatures can also adversely affect your ability to do everything from cooking cost-effective meals at home instead of eating out to having enough energy to get to work and earn.

A better plan: Try to get acclimated to a thermostat level that will save a portion of your utility bill and sign up for balanced bill pay with your utility company to avoid late fees and stress.

Borrow the max for your mortgage

When you get approved for a mortgage, the max amount is usually up to 28 percent of your monthly gross income, up to an amount that’s 36 percent of what you pay each month total for debts. But that amount shouldn’t encourage you to buy more house than you need or can really afford. In fact, those figures have been compiled by banks over the years to minimize default rates, not help borrowers. If you max out the mortgage, you don’t have wiggle room if your monthly income decreases or your homeowners’ insurance or property tax increasing exponentially. Figure what you need based on your circumstances instead of letting the bank set your house-hunting budget.

Carry a 50 percent credit card balance

You do need some credit card use and open credit card accounts for the best credit rating. But carrying a balance only incurs interest charges. If you have the money, pay the full amount each month. If you don’t, ignore the terrible advice to keep your utilization right at 50 percent. That’s too high and will hurt your credit rating. Try to keep the balance for all credit cards to at least 30 percent or lower. Paying the balance in full each month is even better.

Save up by collecting loose change

Swear jars aside, that oft-used advice to maintain a change jar if you have trouble saving is pretty lame. It depends on you always paying in cash, which is really hard to track and can encourage overspending. You may pay more than 10 percent to get the value back at a coin change-up machine, too.

And if a giant jar of quarters is sitting on the kitchen counter, it can quickly disappear. Money in the bank may earn a nominal interest, but it’s something. And you won’t have to worry about someone using it to tip the pizza guy.