By Len Penzo
Sometimes, things in life aren’t always as you might reasonably expect them to be – and many defy all sense of logic.
For example, several years ago, a reasonable person watching Justin Bieber sing on a city sidewalk for spare change would most likely assume the kid wasn’t destined for much success in the music business. Of course, that assumption turned out to be totally incorrect, as he is now a pop music superstar. (Go figure.)
In the crazy world of personal finance, there are also a lot of moves that people tend to shy away from for any number of reasons, either because they assume them to be questionable or ill-advised, or they go against conventional wisdom. Sometimes, people simply refuse to do them for personal reasons.
Here now are a host of personal finance moves that people often avoid making even though they don’t have to – or really shouldn’t…
1. Renting a home. Home ownership has its benefits. However, renting makes sense for folks who plan to be in their home for a short time, and/or fear equity loss in a declining market. Besides, after taxes, the annual cost of owning a home is typically more than the cost of renting. You can calculate the price-to-rent ratio to help determine if renting may be the right decision for you.
2. Using credit cards. Many people unjustly fear credit cards. However, when used wisely and responsibly, credit cards provide valuable benefits that cash simply can’t, including consumer protections, cash dividends, and other rewards. They also help establish and build one’s credit score, which is especially valuable when shopping for long-term credit to buy a home or car.
3. Not paying off the mortgage early. When it comes to 15- vs. 30-year loans, the conventional wisdom is to strive to pay off the home mortgage as early as possible. However, not doing so has its advantages too, especially if you’re in a high-inflation environment – or expect one to emerge in the future.