While reading FreeMoneyFinance.com a few days back, He included a MSN Money online article called: five worst pieces of financial advice.  It was so interesting that I thought I’d give my personal take on those 5 points.

My take on the 5 worst pieces of financial advice

1. Pay off your debt before saving for retirement.

This approach is too risky.  While paying off both my house and car early, I also continued to put at least 10% of my salary into my employer’s 401k plan and I also put away money each month into a 529 plan for my kids.

For the last 5 years before my house was paid off, I bump up my saving percentage by an entire 1% each year.  Then once my house was totally paid off, I did bump up my 401k yearly contribution to the maximum.

2. Don’t borrow for an education.

With a combination of having money from working as a teen, a decent investment portfolio created when I was very young with help from an uncle, working jobs through college, and going to a relatively cheap university, I was able to avoid going into debt to pay for college.  I had to live very frugally, but it was a great financial accomplishment.

I guess in this area it depends on the overall potential return from the degree.  Had I going into medicine, I would have borrowed to get the degree, but if I got a degree in the “history the french painters”, or something without an immediate financial gain, I wouldn’t have borrowed to get my degree.

3. Pay off your mortgage as fast as you can.

This is complex, and for me it was more than a simple math problem.  I think I’m in a better position today by paying off my house early.

But even I didn’t pay off my house as fast as I could.  I still put money aside for my employer’s 401k, a 529 plan, and was still able to save a little bit still for investments in my regular brokerage account.

Today more than ever, I wouldn’t pay off my house as quickly.  While I might pay an extra $50 or $100, the interest rates are so low, and there are so many great opportunities now!

4. Buy a home as an investment.

I agree!  A home is not an investment, it’s a place for stability to raise kid and have your own personal fort of solitude (at least when the rest of the family is away).

That said, it’s still wise to treat it as a financial asset!  To have good finances with everything else in life, then go out and by a million dollar home on a middle-income salary wouldn’t be a huge financial mistake!

5. Make an emergency fund your financial priority.

I don’t have an emergency fund in the truest sense of the meaning, but I do have financial assets that serves as a financial buffer if a hardship was to ever hit me.  So even thought I don’t flat-out declare that I have one, I guess I kind of have a stealth emergency fund.

So while I don’t totally agree with the MSN Money article, for the most part, I do.

What is your take on the MSN Money’s 5 worst financial advice points?

-MR

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