Conventional wisdom dictates a lot of decisions that consumers make and, for the most part, usually doesn’t steer them wrong. On the other hand here are often times when the conventional wisdom may not work for you or your situation, or may be completely false information that has just made its way into our consciousness like an urban legend. Whatever the case may be there are some times when you should listen to conventional wisdom and sometimes when you should ignore it completely. The Tips in this 2 Part series should help to make your decision easier. Enjoy.
Conventional wisdom says; After you’re married all of your new spouse’s debt is now your debt. Generally speaking this is not the case and debt accrued by either spouse before the wedding is legally still that spouse’s debt only. Refinancing a loan together, however, or being added to a new joint account may change that situation, even if your spouse had the account or loan before you wed.
Conventional wisdom says; Retailer credit cards are usually a good deal. While this may be true in the beginning or if you pay off your balance every month the fact is that consumers who do carry a balance will have some high interest rates to contend with. For example, while the average rate on a variable-rate credit card is about 15% most store CCs have an average of 22% for the rate on theirs. The lesson; choose your store credit cards wisely and pay them off every month.
Conventional wisdom says; You make too much money to qualify for federal student loans. This is a downright fallacy in many cases as some federal loans have no income limits. In fact, many private lenders will actually recommend to their customers to fill out the federal loan applications no matter their income, especially Stafford loans which usually have lower interest rates and to also explore PLUS loans.
Conventional wisdom says; Paying your mortgage faithfully and on-time will boost your credit score greatly. The fact here is that, while paying on time all the time will help your credit score slightly it is the negative stuff, like missed and late payments, that affect your score the most. It’s not great news but it is what it is.
Conventional wisdom says; Borrowing from a family member is a great way to put a down payment on your new home. While it may be true that a large loan or even a gift from a family member could make buying your new home easier it also sets off sirens with lenders who want to know where, when and how that money got to your account, making it slightly more difficult to get approved for a loan than if you had not gotten the gift at all.
Conventional wisdom says; Loans for cars are as hard to get a mortgage loans. While mortgages may be hard to get these days getting a car loan is still a bit easier. The reason is that auto loans come with a lower delinquency rate and thus are not as risky. Not only that but, with car loan rates at the lowest they have ever been, getting a great rate on your new car should be a breeze if you have good credit.
Want more? Join us back here for Part 2 soon and we’ll give you the last 6 Tips about conventional wisdom and when to follow it in your financial life. See you then!