Wednesday, February 22, 2017

5 Money "Tips" You Can Ignore

Magazines, blogs, books, pamphlets, news sources, websites, social media resources... there are countless resources that provide advice on how to manage your finances. These resources offer hundreds (if not thousands) of different tips, and wading through all of the advice can be a little daunting. With so many different resources saying different things, how can you be confident which tips are worth listening to? 

First Bank of the Lake is here to help clear up any confusion. This week, we're using our blog to identify some common money "tips" you can ignore.

#1: "Buy All Your Groceries In Bulk."
The general suggestion to buy your groceries in bulk stems from the assumption that many grocery stores offer discounts if you purchase large quantities of a particular item at one time. While this is often true, it is still best to be selective about which items you buy in bulk. If you buy extra and half of it goes unused, you will have wasted money on food that ended up needing to be thrown away.

#2: "You Should Never Go Into Debt."
Some sources claim that you should never take out a loan or go into debt of any kind, since you'll have to pay interest and put potentially yourself at risk for falling into a hole you may never be able to climb out of. While avoiding unnecessary debt is certainly smart, some types of debt may be able to help put you ahead in the long run. Business loans, new car loans, and mortgage loans are a few examples of what is often simply referred to as "good debt." "Bad debt," such as credit card debt, is the type you want to avoid.

#3: "Use Credit Cards To Tide You Over."
If you're like many people, you may pull out the plastic without giving it a second thought. If you don't have enough cash, your credit card may seem like an obvious alternative. However, it's important to realize that when you use your credit card, you will still have to make the payment eventually - with added interest. The moral of the story is, if you cannot afford to make a purchase without using your credit card, you shouldn't make the purchase.

#4: "If Money Is Tight This Month, Just Pay The Minimum Balance On Your Credit Cards."
Credit card statements often include three numbers: the total outstanding balance, the total amount of your current statement, and the minimum payment due. Even if your statement is several hundred dollars, the minimum payment required is often exceedingly low (such as $25). Making the minimum payment can be tempting, but it will end up costing you more in the long run because of interest and potential late fees.

#5: "Buying A House Is Always A Good Investment."
This tip is tricky, because in certain situations, homes are can prove to be incredibly valuable investments that can substantially increase household wealth. The "always," part of the statement can be a bit misleading, however. If you buy a house when you are not financially stable, you may find yourself in a compromising situation. The consequences from defaulting on a mortgage loan can be severe and long-lasting. We encourage you to buy a home, but only when you are confident you will be able to meet the financial obligations of homeownership.

We're Here For You
At our community bank at the Lake of the Ozarks, your success is our success. We are proud to provide the resources our clients need to manage their finances wisely. We offer savings accounts and checking accounts at the Lake of the Ozarks to help you address your day-to-day financing needs. For more information about our financial services in the Lake Area, visit our website at or call us at 573-348-2265.

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First Bank of the Lake - Striving For Excellence
Member FDIC. Equal Housing Lender.

Located at the entrance to the Osage Beach Premium Outlets!

4558 Osage Beach Parkway
Suite 100
Osage Beach, MO 65065

(573) 348-2265

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