3 Totally Common Financial Tips You Should Probably Ignore

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Whether you get your financial tips by asking friends and family or checking out library books, attending seminars or searching online (at sites other than DailyFinance), impractical pieces of advice abound.

Too many personal finance experts tend to populate their cable appearances, books, columns and blogs with the same simple tidbits. But some of that common advice is also ... useless. For each of these three cliched tips, let's look at some better alternatives.

1. In Debt? Cut Up Your Credit Cards

Certain financial gurus advise people in debt to cut up all their plastic and consider using credit cards the eighth deadly sin. Here's some advice: don't.

People land in debt for various reasons, and some -- like student loans -- don't have anything to do with credit cards.

If being a unable to pass up a sale or discount clothing bin is your trigger for getting into massive amounts of debt, then put your cards in a lock box and back away. If you fell into some bad luck and used your credit card for an emergency, consider a balance transfer.

But just because someone is in debt and wants to get out of it doesn't mean they're going to stop spending money entirely. People still need to eat, gas up the car, and deal with the occasional unexpected expense.

Some may counter that it's best to use a debit card, but consider the ramifications of debit card fraud. A compromised debit card gives thieves direct access to your bank account. While most banks will cover the majority of money taken from your bank account, it's an extreme hassle to deal with. When a credit card is compromised, the issuer typically reacts quickly -- possibly even before the customer notices -- and offers 100 percent fraud protection. A credit card should be used for all online purchases, and you need one to rent a car -- otherwise you'll get a hard inquiry on your credit report for using a debit card.

It also helps to have a low-interest credit card for emergencies. Think of it as a fire extinguisher housed in a glass case. You don't want to break that glass unless you really, really need it. But you do want the fire extinguisher to be there.

2. Have a 20 Percent Buffer (or Any Buffer) in Checking

Undoubtedly, it's preferably to have a buffer in your checking account to avoid overdraft fees, but two types of situations cause overdraft fees.
  • Person A is forgetful, forgets a recurring charge or neglects to check his or her balance before making a purchase.
  • Person B uses overdrafts as a form of short-term borrowing because he or she does not have enough money to get by without going overdraft.
Person B doesn't need to be lectured about keeping a buffer in his or her checking account.

About 38 million American households spend all of their paycheck, with more than two-thirds being part of the middle class, according to a study by Brookings Institution.

It's simple for personal finance experts, writers and advisers to recommend tightening up the purse strings, doubling down on paying off debt, and moving out of the paycheck-to-paycheck lifestyle. %VIRTUAL-pullquote-Those looking to avoid overdraft fees should evaluate their banking products.%But those who don't have assets and who struggle each month to make ends meet don't need to hear people harping about avoiding overdraft fees by "just saving a little bit." Every little bit counts for them.

Instead, let's offer practical advice: Those looking to avoid overdraft fees should evaluate their banking products.

Investigate and find out if your bank reorders your transactions. Some banks will change the order in which they process your transactions at the end of the day, so they can maximize the number of overdraft fees they charge.

Internet-only banks are revolutionizing how people can interact with their banks and their own money. Internet-only banks often offer higher interest rates, don't charge monthly maintenance fees and reimburse customers for out-of-network ATM fees. For example, Simple, an Internet-only bank based out of Portland, Oregon, doesn't charge overdraft fees.

Ally Bank (ALLY) offers real overdraft protection by linking a savings account to checking. If you overdraft, it will take $100 out of your savings to cover your overdraft -- free of charge.

Americans who use overdraft fees as a form of short-term lending may want to set up a line of credit with a credit union or have a low-interest credit card for emergencies.

3. Skip That Latte!

Many years ago, David Bach created a unifying mantra for frugalistas and personal finance enthusiasts. The "latte factor" was that you could save big by cutting back on small things.

Bach's deeper concept -- that each individual needs to identify his or her latte factor -- got lost in the battle cries, with many people crusade specifically against your daily cup of coffee.

Yes, people should be aware of leaks in their budget. But everyone's budget looks different. If "Summer" buys a coffee each day, but rarely buys new clothing, and trims her budget by cutting cable and brown-bagging it to work, then leave her alone about her caffeine habit.

People are allowed to live a little when it comes to their personal finances, whether your little splurge is organic food, name-brand snacks or triple-ply toilet paper. Most people, except for maybe those on TLC's "Extreme Cheapskates," could find more ways to trim the budget.

But why keep trimming? It's important to save for the future, but it's also imperative to enjoy life in the present. Personal finance shouldn't be a culture of constant denial.

Create a budget, figure out if you can work in an indulgence or two, and don't live in complete deprivation

For those working to dig out of seemingly insurmountable debt, then yes, it may be time to identify and limit your latte factor.

Decide What's Right for You

Personal finance experts, bloggers, reporters, advisers are well intentioned in their advice. Certain personal finance idols truly believe everyone should use cash, while others hawk prepaid debit cards claiming they're a great tool. Okay, maybe sometimes personal finance experts are a bit self-serving and not looking out for your best interests. Just keep in mind, personal finance is indeed personal. A generic piece of advice, like keep a 20 percent buffer in your checking account to avoid overdrafts, may not be helpful in your personal situation.

Erin Lowry writes for DailyFinance on issues relating to millennials, money and personal finance. She is the blogger behind Broke Millennial, where her sarcastic sense of humor entertains and educates her peers. She is also the brand and content manager for MagnifyMoney.

15 Easy Ways to Cut Your Health Care Costs Without Cutting Quality
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3 Totally Common Financial Tips You Should Probably Ignore
From general practitioners to dentists to acupuncturists, many health care providers offer discounts when you send them a word-of-mouth referral. It may only be $50 or so, but money is money.
It doesn't hurt to ask for a discount: The worst your doctor can say is "no." Many practitioners offer lower rates when you pay with cash or check instead of a card. (They also offer payment plan options if you can't afford to pay all at once.)
Bring up as many concerns with your primary-care physician during an office visit as possible, advises Adam Beck, assistant professor of health insurance at The American College, which trains people in the finance industry. "Your doctor will be able to test and treat you for a variety of potential ailments or conditions while paying one co-pay, as opposed to returning each time you think something is awry."
Always review your medical bills the same way you would a restaurant bill. If you feel like a billing mistake was made -- or that you've been overcharged -- speak up. "The Medical Billing Advocates of America estimates that roughly eight out of 10 medical bills contain errors," says Allen Erenbaum of the Consumer Health Alliance, a national association for non-insurance discount health care programs. "All prescription drugs and medical procedures have codes, and sometimes there could be a costly mistake." If you need help, you can find patient and billing advocates through MedicalBillMediation.com and Medical Billing Advocates of America.
"Establish a relationship with a primary-care physician and have all the routine screening done that is recommended for someone of your age and gender," advises John Garner, author of the "Health Insurance Answer Book." "Catching problems early is not only less expensive, but it could save your life." (Of course, you are exercising daily and eating nutritiously.)
Make a habit of requesting the generic alternatives for prescriptions. Your doctors may write their prescriptions this way automatically, but it never hurts to remind them. Additionally, ask if there's a different form of the same medication. "For example, if you are prescribed tablets, ask if you may take capsules or lozenges. Sometimes the difference in cost with your insurance can mean a difference in half the tablet price. I've saved lots of customers this way just by calling their doctor for them personally," says pharmacist Steve Levin, owner of Woodland Hills Pharmacy in California. The wisdom of buying cheaper generics also applies to over-the-counter medications. For example, Target sells a 100-tablet bottle of Tylenol for $6.99, while its store brand of acetaminophen costs $5.29 for 250 tablets.
The emergency room may seem like your best bet when you don't have time to wait for an appointment, but it should only be used in life-threatening situations. The ER is much more expensive than a visit to your family doctor, sometimes by hundreds of dollars -- and that's before you even get to your actual treatment. If you can't wait to see a physician, or you're out of town, your best option is an urgent care center. They are often a little more expensive than visiting a general practitioner, but definitely less costly than the ER.
Medical bills can add up quickly, especially when a doctor starts doing test after test. Garner says to always ask questions such as, "Is this test or procedure necessary?" and don't settle for vague answers.
Get the insurance coverage that works best for your family's needs. If you're a relatively healthy person who goes to the doctor once a year and the dentist every six months, but usually nothing more, skip the ultra-expensive premium with a low deductible. Contrarily, if you find yourself visiting the doctor more often, an insurance plan with a low deductible could save you much more even though your premium is higher. To better understand your choices, consult a licensed health insurance agent.
"Non-insurance discount health plans can save you money on ancillary services your insurance typically does not cover, like dental care, vision, prescriptions, alternative medicine and more," explains Erenbaum. According to the Consumer Health Alliance, you can save 20 percent to 60 percent on services with a non-insurance discount plan. Check out America's Premier BenefitsNew BenefitsCareington and DentalPlans.
"If you require a medication that isn't available as a generic yet, joining a discount club could reduce what you pay for prescription drugs dramatically," notes Beck. These discount cards are often free. Also ask if your pharmacy has any prescription reward programs. These provide the incentive for pharmacy loyalty, saving you money and ensuring repeat business for the pharmacy.
Your annual vision exam may require an updated prescription, but buying glasses or contacts from your doctor may mean paying up to 50 percent more. Instead, go online to find less expensive -- and sometimes more fashionable -- options.
Receiving medical care from a provider out-of-network can cost you much more than using someone who's in-network. Before booking an appointment, call to confirm the office's network status with your insurance company. Ensuring you only see in-network providers can become difficult in a hospital, but make sure the hospital staff knows you have a strong preference for in-network physicians.
 "Many universities offer services like dental care and acupuncture for a fraction of what you would normally pay at a practice," says Erenbaum. "The work is done by students under their professor's guidance." The American Dental Association and the Accreditation Commission for Acupuncture and Oriental Medicine list accredited schools.
"Be aware and take advantage of treatment at free clinics when available," advises Beck. "Particularly in urban areas, there are opportunities to treat some conditions for free, namely those that pose a risk to public health. For example, if you are concerned about a sexually transmitted infection, a visit to the city health center may involve a depressing waiting room, but the screening and treatments will be free."
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