We've all heard the same old advice about money: “Skip the latte,” “Pay off all your debts as soon as possible,” “buy a house as soon as you can.”
Sounds responsible, right? Not always. Some so-called “common sense” money habits may actually be holding you back from making real financial progress.
Here are the top tips that aren't as smart as they seem, and what to do instead to actually succeed.
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“Many people believe the safest decision is to pay off their mortgage early,” said Jeffrey Hensel, a broker partner at the firm. North Coast Financial Sector.
In his practice, he has witnessed similar attempts by clients to tie up liquidity in this way, only to find themselves running out of cash when problems arise. investment opportunity or an emergency.
“Repayment of an adjustable rate mortgage with reserves or cash generating investments can provide greater long-term safety in most cases,” Hensel said.
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Another typical practice is to avoid all debt, Hensel said.
According to CNBC, credit card debt in the US reaches a record level of $930 billion.
“While high levels of consumer debt are harmful, properly formulated real estate lending can lead to higher returns,” Hensel explained.
The Hensel team records an average of 12% to 15% annual profit on the projects they undertake for remediation and resale through financing rather than using cash sources to finance the projects.
Hensel noted that people sometimes realize that holding huge balance sheets is conservative. one bank. “He’s really risk-oriented,” he said.
According to his clients, he said their sense of stability increases as they diversify reserves within institutions, maintaining balances within the Federal Deposit Insurance Corporation (FDIC) insurance limit.
Hensel observed that most investors put off estate or trust planning, thinking it doesn't make sense until they're older.
“In inheritance lending, I have been known to see families spend months and tens of thousands on litigation,” he said.
He said posting trust documents with more time saves those costs and supports directives.
Finally, Hensel explained that focusing your exit strategy on refinancing will work against you. “Any change in the market or tightening of lending criteria leads to a decline in refinancing and leaves borrowers vulnerable,” he said.
