'Skip That Latte!' and Other Financial Advice We Hate

Jen Williamson Updated on May 13, 2019

The world is full of terrible financial advice. Some of it is worse than others, but a certain percentage is just cringe-inducingly bad.

Here’s a roundup of the financial advice we most love to hate.

Skip the latte

Sure, if you really need to save money, it can be helpful to do an audit of what you spend, find the little everyday luxuries you don’t need, and stop spending money on them. But in general, this is bad advice.

Why? It’s a lot of effort for a small reward. (As described in this video here.)

A tall Caffe Latte at Starbucks costs $2.95. Let’s say you buy one every day for a month: that’s $88.50 per month. It won’t kill you to have an extra $88.50 in your pocket, but think of the effort it takes.

Every time you pass that Starbucks, you’re going to have latte cravings. You’ll have to wrestle with yourself—and sometimes you’ll lose. You wind up saving less than that $88.50 per month, and feeling bad about it. There are better ways to save.

Buy a house—the market is hot

A lot of people took this advice just before the housing market crashed—and it took them years to dig themselves out.

Buying a house is a great thing for some people. And some get lucky and sell for much more than they bought for. But thinking of your home as an investment is a bad idea. No one can predict what the market will do, and life circumstances may push you to move before you’ve recouped your investment.

Bottom line? Buy a house when you’re financially ready. And don’t assume you’ll make money on it. You may, but it’s quite possible you won’t—so plan accordingly.

See also: 6 Reasons You're Not Ready to Buy a House ...Yet

Put a year’s worth of money in your bank account before you (fill in the blank)

Whatever you most want to do—start a business, move cross-country, have a baby—there will be people telling you not to do it until you have a year’s salary saved. This is dumb.

Should you have some savings? Yes, definitely. Is it realistic to build up a year’s worth within a reasonable timeframe? For most of us, no. This advice could leave you waiting years or even decades before you pull the trigger on your dream.

Whatever it is you want to do, people have done it without a year’s worth of savings. Do the research. Talk to those who’ve managed it successfully. Take stock of your finances and see how much you really can save within a timeframe that works for you.

But don’t put your dreams on hold for a savings goal you may never meet.

See also: Do You Really Need a 6-Month Emergency Fund?

New call-to-action

Not sure what to do with your life? Go to grad school

If you just graduated college and still feel aimless, it can be tempting to go back into academia—an environment you’re familiar with, and one that gave you purpose.

But a Master's degree can be ruinously expensive—adding tens or hundreds of thousands to your student loan debt—and having one doesn't guarantee a high-paying job.

If you know exactly what you want to do and you need a Master’s or Ph.D. to do it, then go to grad school. But if you’re just flailing, there are plenty of ways to flail without adding thousands to your student loan debt.

See also: 'I Keep Paying, But It’s Like Pouring Into a Bucket With No Bottom ...'

Financial advice that really works? Refinance your student loan to a lower interest rate

Some lenders offer as little as 2.5% interest when you refinance your student loan. Keep in mind that even a Perkins loan will run you 5% interest these days.

Refinancing is good financial advice because it’s low-effort, high-reward. Refinancing takes about 20 minutes in most cases, and you can save hundreds per month and thousands over the life of your loan. The average amount most people who refinance save is $253 a month, or $16,183 over the life of their loan. It works, and, maybe even more importantly, it feels like it works.

Of course, the amount you could save is different for everyone. Want to see how much you could save?

Check out this student loan refinance calculator to find out.

About the Author
Jen Williamson

Jen Williamson is a freelance writer living in Brooklyn. She has written for a variety of industries, including software, education, business, and personal finance. Prior to that, she worked at an adult literacy nonprofit in Philadelphia, where she coached nontraditional students in passing the GED test and applying for college. When she isn’t writing or reading—which is rare—she can usually be found planning her next travel adventure, training for a marathon, or sneaking in somewhere she’s not supposed to be. Read more by Jen Williamson

Refinance and Save Today With These Lenders

#1 - Nitro Recommended View More Details

Special offers for medical resident and fellow refinance products

  • Fixed rates: 2.49% - 6.25% APR
  • Variable rates: 1.88% - 6.15% APR
  • Minimum credit: 650
View More Details
Visit Splash View Loan Disclosure

Splash Financial is a leader in student loan refinancing with new rates as low as 2.49% fixed APR which can save you tens of thousands of dollars over the life of your loans. No application or origination fees and no prepayment penalties. Splash Financial is in all 50 states and is intensely focused on customer service. Splash Financial is also one of the few companies that offers a great medical resident and fellow refinance product. You can check your rate with Splash in just minutes.

  • Low interest rates – especially for graduate students
  • No application or origination fees. No prepayment penalties.
  • Co-signer release program - you can apply for a cosigner release form your loan after 12 months of on-time payments
  • Specialty product for doctors in training with low monthly payment

Click here to see more of Splash's offerings and to see how you can save money.

#2 View More Details

For every loan they fund, they contribute to the education of a child in need

  • Fixed rates: 2.83% - 6.74% APR
  • Variable rates: 1.99% - 6.84% APR
  • Minimum credit: 660
View More Details
Visit CommonBond View Loan Disclosure

CommonBond was founded in 2011 by three MBA graduates from the University of Pennsylvania’s Wharton School who wanted to help their peers escape from high-interest student loan debt. Its original focus was on grad students, but it has since expanded to cover undergrads as well.

Of all the companies we reviewed, CommonBond has some of the best customer service. The company prides itself on being easy to reach by email, phone, or live chat. It offers networking events, expert panels, insider newsletters, and even has a program help borrowers who lose their jobs to find new ones. CommonBond also makes you feel good about choosing to refinance with them by donating money to an education nonprofit for each loan they write.

CommonBond Student Loan Refinance review

  • Unemployment protections - If you lose your job or decide to go back to school, you can delay your payments for up to 24 months.
  • Social promise - For every loan they fund, they also contribute to the education of a child in need.
  • Hybrid loan option - Offerings include a 10-year hybrid loan with fixed interest for the first five years, and variable interest for the final five.
  • Referral bonus - For every friend you refer who refinances their loans with CommonBond, you’ll earn a $200 cash bonus.
  • Qualification - Borrowers must have graduated at least 2 years prior if they want to apply without a co-signer. And borrowers in 6 states – Idaho, Louisiana, Mississippi, Nevada, South Dakota, and Vermont – cannot currently refinance through CommonBond.

Get a personalized review of your refinancing options with CommonBond today.

#3 View More Details

SoFi is the leading student loan refinancing provider. 

  • Fixed rates: 2.74% - 6.94% APR
  • Variable rates: 2.25% - 6.59% APR
  • Minimum credit: 650
View More Details
Visit SoFi View Loan Disclosure

$30 billion+ in refinanced student loans. SoFi has some of the lowest interest rates and, unlike the other lenders we reviewed, there's no maximum on the amount you can finance. Some state restrictions may apply.

  • Serious savings: Save thousands of dollars thanks to flexible terms and low fixed or variable rates.
  • No hidden fees, no catch: No application or origination fees. No pre-payment penalties.
  • Fast, easy, and all online: Simple online application and access to live customer support 7 days a week.
  • Access to member benefits: SoFi members get career coaching, financial advice, and more—all at no cost.
  • 98% of surveyed members would recommend SoFi to a friend

Save thousands on your student loans and pay off your loans sooner. Find your rate.

#4 View More Details

Ability to apply for cosigner release after 24 consecutive payments. 

View More Details
Visit NelNetBank View Loan Disclosure

Give Your Life’s Journey a Jump-Start.

If you’re ready to put student loans in your rearview mirror, Nelnet Bank student loan refinancing offers low rates and flexible terms to help you start getting ahead.

  • VARIABLE RATES: 1.95% - 5.69% APR See Disclaimer
  • FIXED RATES: 2.55% - 6.31% APR See Disclaimer
  • AUTO DEBIT SAVINGS: We’ll knock .25% off of your interest rate when you enroll in auto debit. See Disclaimer
  • NO ORIGINATION FEES: No application, origination, or prepayment fees on Nelnet Bank loans.
  • HARDSHIP PROTECTION: Hardship forbearance helps protect against unexpected loss of income. See Disclaimer

See How Much You Can Save: Estimate your savings with a student loan refinance from Nelnet Bank.

#5 View More Details

Works with 300+ community lenders for higher approval chances

  • Fixed rates: 2.95% - 7.63% APR
  • Variable rates: 1.90% - 5.25% APR
  • Minimum credit: 660
View More Details
Visit LendKey View Loan Disclosure

Connecting student borrowers to a network of over 300 community lenders with low interest rates. By partnering with these lenders, LendKey is able to give consumers direct access to the best rates available from the most borrower friendly institutions. As the servicer of all loans obtained through its platform, you can rest easy knowing your personal information will be safe and that the best customer service team will be ready to answer your questions from application until your final payment.

LendKey Student Loan Refinance review

  • Lightning fast rate check - 2-minute rate check with no impact on your credit score
  • More lenders, more options - see the best offers from over 300+ community lenders for higher approval chances
  • Life of loan relationship - With LendKey, your personal information will never be sent or passed on to third parties. Their customer service team is with you from the moment you land on their website until you've completely repaid your loan.
  • Unmatched benefits- Community lenders put people over profits and offer unique benefits like cosigner release after 12 on-time payments, interest only repayment options to keep monthly payments low, the largest unemployment protection period in the market, and more.

Get a personalized quote from LendKey now.

#6 View More Details

Best for borrowers who want to customize their repayment schedule to pay off debt fast.

View More Details
Visit Earnest View Loan Disclosure

Using technology, data, and design to build affordable products, Earnest's lending products are built for a new generation seeking to reach life's milestones. The company understands every applicant's unique financial story to offer the lowest possible rates and radically flexible loan options for living life.

  • Commitment-free 2 minute rate check
  • Client Happiness can be reached via in app messaging, email, and phone 
  • No fees for origination, prepayment, or loan disbursement
  • Flexible terms let you pick your exact monthly payment or switch between fixed and variable rates
  • Skip a payment and make it up later
  • Online dashboard is designed to make it easy to apply for and manage your loan

Click here to apply with Earnest and to see how much you can save.

#7 View More Details

16 different loan term options – more flexibility to pay down your loan faster

  • Fixed rates: 3.24% - 5.54% APR
  • Variable rates: 3.34% - 5.69% APR
  • Minimum credit: 680
View More Details
Visit CollegeAve View Loan Disclosure

College Ave Student Loans offers major help and minor stress. We’ll help guide you through the process to find the right loan term and interest rate for you and the family budget.

  • Fast rate check: Get your new rate in 60 seconds 
  • Instant credit decision
  • Super flexible terms: 16 loan terms available from 5 to 20 years
  • No fees to apply

Click here to see more College Ave offerings and to start saving today! 

Comments

I reduced my student loan payment by $152 per month, by refinancing thru Nitro:

Save Money Now