Long time no see! I can’t believe this is your first guest post. You are always welcome to write one on InsightWriter.com

And I would love to write a guest post for you too. Soon as Im done writing the one for Jacob. Sorry its taking so long Jacob!

And this is a great article. Its amazing how much bad advice there is out there. And how careful we bloggers have to be of giving it.

Personally, Id like to hear stories of people who fought back against bad advice, and helped correct a bad situation. I hope there are some good stories out there?

Cheers,
Jeremy

That’s brilliant.

What I find fascinating, though, is how often people give advice in areas in which they are doing poorly. For example, the person in a bad marriage who doles out relationship advice. In fact, it seems that the amount and frequency of advice-giving is inversely proportional to how well a person is doing.

I think it’s a misery-loves-company sort of thing. Either that, or they are so deluded as to think they are doing well.

I look at advice the way I look at buying stuff. If someone approaches me to sell me something/give advice, that’s a red flag right there. If I see someone doing something that I want to do, I approach them and ask them how they did it.

I think if you try to understand why a person is telling you these things or how they grew up (dirt poor or well off) you’ll be more likely to relate to their point of view.

1) it’s a condo that I bought in early 2000′s as one unit in a multi-property purchase. I sold off the other properties in 2005-6 and this condo is the last one left. Am currently living in it when I am in the states.

2) my preference would be to (if I own at ALL) would be to have 50+ acres of land with a low-profile house on it and short airstrip, and not have a condo at all…but this is what I have at the moment.

3) am mainly concerned with IRS and other govt agencies that could apply leverage on me if I owned property in US free and clear. If property has a high % loan remaining then there is less political risk

4) selling and replacing the property is not really a good option for me at the moment

So the options are basically 1) pay only the scheduled payments 2) continue accelerated payoff 3) pay off loan in full

I suppose the question really isn’t answerable since we don’t know at this point whether the American economic decline will be gradual or sudden. Gradual decline over time should be manageable, Sudden collapse requiring putting my exit strategy to work would probably result in 100% loss of the asset (at least that will be my assumption). Remember that real estate only has value due to contract law. If a government collapses, contract law is compromised.

The guy told me that in order to be a success financially you had to grow your money slowly and the best place for me at the time (back in 2001) was to place my money in a bank CD and enjoy the 4-5% interest because that’s all I was capable of achieving anyways. “Don’t worry. You seem like a smart boy. There is no need to take all that risk losing money.”

I am the kind of guy that will listen to what people have to say. Just because it sounds like awful advice does not mean you can’t get something constructive out of it. For example, being a complete contrarian I try and listen to the overall assumptions by the general public. In that particular case it was everyone including the rich guy telling people to stay out of stocks in 2001. Long story short I didn’t listen and it payed off rather well.

He is a design engineer by profession and six months back he was promoted to a project leader position where he had to make money out of the project for his firm. He was excellent at his work but did not know what managing a team was and has made many a professional mistakes which are eventually gong to backfire on him.

Now he is not bothered about the outcome and he says i don’t care if they fire me (he is actually hoping they do it). When I ask how is he going to service the loan he took a couple of months back he says he has many ideas which can bring him the money . A little more probing told me that those plans were not feasible at least in the short term but he was willing to take the risk.

I am also convinced despite the odds he will quit his job and do something worthwhile.
Whats my point? some people might be successful eventually, yet you need not follow their advice as it is highly unlikely to work for you.

“Its not necessary to have so much money to start on your own rather you take the plunge and the money will arrange itself” is his motto.

Do i believe him? in his case i guess i do.

I know I was just as ignorant of stocks and investing in general in the past as your friend, but have you considered educating her? I, for one, would have been extremely grateful to be taught something new!

“I knew I couldn’t get her to understand that at the age of 27..” – why not?

And
“But if you know it’s a bad idea, should you tell them not to do it? Hmmm…”, again, why not?

I guess where I’m coming from is that, having had to learn some things the hard way, I’m up for learning with/teaching my friends. (In fact, I’ll be spending a day or 2 this weekend doing a lot reading with a friend and discussing our strategies).

Looking forward to your reply!

Plouffey, that’s strange that someone got mad at you for that. I could see someone disagreeing with you about it, but why do you think they got mad? I think ARMs are usually a better deal than fixed rate mortgages, but anytime you can only afford a property with a certain type of mortgage, that’s a sign that it’s way too expensive. Glad to hear you didn’t overextend yourself.

Now, I have no debt, an emergency fund, and a nice 401(k) going. Meanwhile, she is upsidedown on two properties and will probably lose everything.

@ Moneymonk, all the time I hear people talking about stocks being risky, but I think these people have never owned or even researched any stocks themselves. Someone hears about Enron, and that puts a stigma on the entire asset class of stocks.

That’s where you get proxy advice from friends based upon hearsay and rumour. And hearsay and rumour from non-experts very easily enters the community knowledge-base without any expert filtering.

It becomes true because it’s feasibly credible. For example, and you still hear this today, “the taxman paid for my shiny new car outside”.

It’s nonsense. The deductions you have to take on a personal taxation level, completely counteract any write-down benefits the company receives. What’s giveth is taken away elsehwhere.

But it’s a great boast down the pub to your mates. Completely without foundation though.

Great article and advice to beware of giving advice in areas you don’t understand. And to be wary of the source of the advice and who is giving it.

I get calls from clients asking advice on IT. Being such a wide field from PCs to programming, from web-sites to blogs etc, you cannot be all things to all people. We do one ot two things very well and can rightly claim to be expert. But there is a line.

So it may be useful to have a list of experts you can refer people to if you expect to be asked about areas you cannot properly give advice on.

LOL

a classic one. Being in the PF culture, I have heard it all.

THAT’S the best advice you could ever give! I try to make it a habit to only heed the advice of people who have done what I want to accomplish. Experience trumps all in my book. Sometimes experience is negative, as in “Don’t do what I did.” But it is still experience nonetheless.

Another thing I ask when receiving advice is, “Are you doing this? How’s it going?” If someone won’t even follow their own advice, it’s best to just change the subject!