What non-traditional personal advice have you received that turned out to be helpful?

[jenn_jenn]

Maybe even something that goes against traditional advice. Did it work in your favor by chance or was there something else to it?

This came up because my sister was recently bought her first house and I gave her the same “bad” advice my mom gave me when we bought our house and am so grateful for it. She said, when you’re young and shopping for your first house, it is okay to feel a little stretched. I caveated this advice with but know your risk tolerance and be prepared to make sacrifices.

My mom’s reasoning was that in your late 20’s, you’re still entering prime earning years and your income will likely increase meaningfully. It might feel tight for the first couple of years, but you’ll grow into it. Obviously, this can’t be a blanket approach and is very person and career dependent.

It was playing with fire, but worked out in our favor. I think some of it was luck and some of it was calculated risk. I wouldn’t hand out this advice as a rule of thumb, but it was helpful for us and for my sister.

The house we ended up with was a little outside of our initial budget and felt so scary at the time. I joked that we’d be eating PB&J’s for life to afford the mortgage. Within 6 months, we’d easily grown into it. And 4 years later, we wish we had gone even more over budget, but wouldn’t have changed our decision knowing what we did at the time.

Similarly, my sister bought her house a little bit outside what they were initially hoping to spend. They felt a bit squeezed but opted to spend the extra money for the nicer school district. Less than 4 months later, both she and her husband received promotions that make it easily affordable.

So what (if any) non-traditional advice have you received that might be helpful or make sense in certain scenarios?

[ua_guy]

I received the same advice from my dad years ago when considering buying my first house. Buy as much as you can, even if it might be a stretch. Real estate should always increase in value over time (and if it doesn't, there are bigger problems), and prices today will likely feel cheap in the future. That was my jump-off point when everyone in my peer group was saying the market is too high, it's about to crash, buying is a really bad idea*. This was in late 2005, and they weren't wrong in the moment, but they also weren't looking 10 years down the road. The slap for most of my peer group was when prices did fall during the crash, they didn't fall enough to be truly affordable, and borrowing requirements had increased significantly so they were still sidelined.

Dad gave me similar advice about college. If you don't know what you want to do, go to school and study something, anything. It's as much of a learning/growing experience as it is about finding a job later. Having a credential is better than not having one, and you aren't sentenced to working in your area of study. The cost is a mere pittance compared to potential future earnings... And I've never looked back.

The other piece of advice...somewhat controversial... he told me not to join the military if I was ever considering it. Said I didn't need the discipline, didn't need it to pay for education. Obviously, he said because I was an adult I was free to join if I really wanted to, but he, as someone who had served in the military, steered me away. Said other people want to fight for those causes right now, you don't have to, and for that we show gratitude and thank them for their service. And so I didn't. Thank you, if you did.

He also advised me to save 10% of everything I made, even if I couldn't afford it. Find a way to afford it, he said. He meant that as a base savings rate. I've tried to heed and balance that advice in my more challenging years as a kid (see above advice about first home purchases).

[myrdale]

Shoes and shirts are things to grow into. Mortgages? I fall more into the camp of buy less than you can afford, particularly starting off.

I don't have any "non-traditinoal" advice that comes to mind that I've been given.

My non-traditional advice when it comes to money is:

Educate yourself on money. Books, pod cast, radio.
Talk about it with others. Not necessarily personal salary, but in general.
Run away from debt, not towards it.
Look 5, 10, 50 years down the road. Have plans, even if they are finger painted.
Aim to be self sufficient, both now and in retirement.

[kork13]

I mean ... Pretty much all of the sound financial advice is atypical anymore.

Case in point, all of the advice about debt. As with myrdale, I was taught to avoid debt whenever possible, and when unavoidable, you borrow the smallest amount required & pay it off as quickly as you can. But that's a loony mindset if you ask most people.

The other main advice I was always taught was to save first, no less than 10%, and live on the rest.

[disneysteve]

Pretty much all of the sound financial advice is atypical

Exactly! Dave Ramsey often says, "Normal is broke". By choosing not to be broke, we are all abnormal.

[ua_guy]

The advice to stretch on a mortgage is a calculated risk. Hard working people can generally bet on a steady and growing income if they continue to grow their skills. That's very different from amassing credit card debt from buying junk on Amazon.

[jenn_jenn]

The other piece of advice...somewhat controversial... he told me not to join the military if I was ever considering it. Said I didn't need the discipline, didn't need it to pay for education. Obviously, he said because I was an adult I was free to join if I really wanted to, but he, as someone who had served in the military, steered me away. Said other people want to fight for those causes right now, you don't have to, and for that we show gratitude and thank them for their service. And so I didn't. Thank you, if you did.

My husband who went the Naval Academy and did 10 years in the Marines would agree with your dad on this. Not only the personal cost but (for him) came at a high financial cost versus if he had started is current career right out of college.

[jenn_jenn]

I mean ... Pretty much all of the sound financial advice is atypical anymore.
.

Hmm, I guess I have a little bit of a different perspective. I think most traditional or standard financial advice isn’t atypical, it’s just that normally people don’t follow it and that is why it is “normal to be broke”.

I think for most people it is pretty traditional advice to limit debt where possible! Although taking it to an extreme like don’t take on debt ever, as in don’t buy a house until you can buy it out right, would be non-traditional.

[jenn_jenn]

The advice to stretch on a mortgage is a calculated risk. Hard working people can generally bet on a steady and growing income if they continue to grow their skills. That's very different from amassing credit card debt from buying junk on Amazon.

Agree with you 100%! I gave this some more thought and I think it also depends on how you manage the rest of your finances. If you’re someone who stretches your spending in other areas, it won’t work. It’s a calculated risk dependent upon your income rising and also having financial discipline elsewhere.

[disneysteve]

Agree with you 100%! I gave this some more thought and I think it also depends on how you manage the rest of your finances. If you’re someone who stretches your spending in other areas, it won’t work. It’s a calculated risk dependent upon your income rising and also having financial discipline elsewhere.

Betting that your income will remain steady, uninterrupted, and consistently rising is definitely a risk. It's very easy to lose that bet. Your job shuts down. A global pandemic occurs. You get sick/injured and can't work. You get divorced and lose your spouse's income.

I didn't get this advice from anyone else but we definitely didn't follow the typical advice when we bought our house. The rule of thumb was that you could spend 3-3.5x income. We agreed that was way too high so we bought a house that was only about 1.6x income. Even though I was newly in practice and was quite confident that my income would rise considerably, I didn't spend money I didn't yet have. As a result, our mortgage was super affordable, even more so once my income increased. By the time we paid off the house (early) I was making 3 times what I made when we bought it. We totally could have afforded a more expensive house but by not stretching, it allowed us to pay off loans faster, pay off the house faster, and build our portfolio larger.

[ua_guy]

Betting that your income will remain steady, uninterrupted, and consistently rising is definitely a risk. It's very easy to lose that bet. Your job shuts down. A global pandemic occurs. You get sick/injured and can't work. You get divorced and lose your spouse's income.

I didn't get this advice from anyone else but we definitely didn't follow the typical advice when we bought our house. The rule of thumb was that you could spend 3-3.5x income. We agreed that was way too high so we bought a house that was only about 1.6x income. Even though I was newly in practice and was quite confident that my income would rise considerably, I didn't spend money I didn't yet have. As a result, our mortgage was super affordable, even more so once my income increased. By the time we paid off the house (early) I was making 3 times what I made when we bought it. We totally could have afforded a more expensive house but by not stretching, it allowed us to pay off loans faster, pay off the house faster, and build our portfolio larger.

The "traditional" advice is undoubtedly solid. Don't stretch, buy only what you can afford. Like Jenn_jenn said, the non-traditional advice must be strategic. This doesn't apply to people who can't be disciplined in their other spending and saving. And it should be for a house which is positioned for future value or use, and which will grow in value over time. An example of future use is, if you're planning to have a family, keep that in mind when buying a place. It may save you a lot of money / an additional move in the future. Or if the home has something very undesirable about it but fits your budget, consider a different house if it means being budget-flexible. Maybe it's on a really busy/noisy street, or the neighborhood isn't what you are planning on growing into...things you cannot change but will always limit its future value.

I think smart people who are being strategic are well-advised to be a little non-traditional when it comes to GOOD real estate.

The other part is to remove morality from the equation. Businesses borrow money all the time, and it doesn't always work out. That's both the risk and cost of doing business, but it's still highly advised for businesses to take calculated risks when attempting to grow. When someone suddenly can't pay for a home, it's viewed as personal failure. Sometimes it's just a series of unfortunate events, but that doesn't mean it's not possible to emerge and pursue success again. Most people are going to find another job and are lucky enough to have support networks, and in relationships, both people typically work, reducing the liability if one person loses a job or has trouble. Sometimes people have to take risks to gain a little, and I think it's OK to do that with the best of intentions.

DS...if you were to do it all over again, where, if anywhere, would you have done something differently based on what you know now?

[disneysteve]

DS...if you were to do it all over again, where, if anywhere, would you have done something differently based on what you know now?

Well I doubt any of us would make the exact same decisions in life if we knew then what we knew now.

Specifically about our house? I don't think we made a bad decision. Certainly not financially speaking. Buying a house that was well within our means afforded us so much more flexibility with our money. You have to realize that when we bought the house, I had 100K in student loans, my wife still had a small student loan and a car loan. On paper we could have "afforded" to spend more but it would have been super tight and that's not how we wanted to live.

Less than a year after buying the house, my wife was able to leave a bad job and focus on starting a family. Less than 6 years after buying, I was able to leave a bad job spur of the moment and take a few months to decompress and find a much better fit rather than being forced to take the first thing that came along. Those things were largely only possible because we didn't have a huge mortgage payment to support.

We still live in that house 31 years later so I think we did okay.

All of that said, I totally agree with you about risk. Low risk = low reward. In our case, stretching to buy a more costly house just isn't where we chose to take the risk.