3 pieces of financial advice that cost me thousands of dollars

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• In my 20s, I got my financial advice from friends, podcasts, and "experts" sharing tips in passing.
• I thought I had to stay loyal to one bank, that I should open new credit cards I couldn't afford to pay off, and that I should always max out my 401(k) no matter what.
• It turned out that was horrible advice for me. Other banks offered higher interest rates on savings, I paid a fortune in credit card fees, and I left myself almost completely without cash.
• By the time I realized my mistakes, I'd lost thousands of dollars I didn't need to pay.
• Read more personal finance coverage.

For most of my life, I stayed silent about my finances. For better or worse, the topic wasn't something that came up often. I was an English major in college and financial accounting classes weren't available. My family taught me basic financial principles (like balancing a checkbook and opening up bank accounts) but that's really all the financial knowledge I had for most of my 20s. Any other tips or tricks came to me in the form of podcasts, conversations with friends, or people I thought were experts sharing tips in passing.

On the verge of turning 30, I finally opened up about my finances to my boyfriend, showing him every bank account and retirement account I had attached to my name. Within minutes of him eyeballing all of my assets, he screamed: "You have made incredibly big mistakes!" His first look at my finances, plus a meeting with a financial planner a few weeks later, brought a big problem to my attention: Other people's financial advice had already cost me thousands of dollars. 

Wondering what that advice was? Here are the three biggest things people told me to do that ended up setting me back financially. 

1. Stay loyal to your bank 

When I was 25, a friend of mine told me that one of the best things you can do is to stay loyal to a bank. She said to me that when you open a checking or savings account somewhere, you should plan to keep your money there for a while, and if you left it would hurt your credit.

I did just that. I opened up personal accounts and business accounts at the same bank, a bank that only offered 0.03% (just above the average interest rate in the US). But I didn't think anything of it and I never searched to see the interest rates offered at other banks.

When I showed my boyfriend my personal accounts at that particular bank, he nearly fainted. The bank he used offered close to 2% interest on money saved in its high-yield savings accounts.

That 2% doesn't sound like a lot, but it matters. As an example, if someone had $50,000 at bank A with that 0.03% interest rate, they'd make $150 a year. At bank B, with a 2% interest rate, they'd make $1,000. This was a mistake that cost me thousands and thousands of dollars over the five years I built up savings at the low-interest bank.

Also, it's not true that switching banks hurts your credit score. But it's a very convincing myth to believe, especially when you lack financial knowledge. 

2. Open up new credit cards just for the rewards

You want to know what will hurt your credit score? Opening up new rewards credit cards and having to close them down the road. I heard on a podcast, years ago, that one of the best ways to travel for "free" or with points is by opening up a handful of credit cards and spending the required minimum to receive the introductory points offer.

For example, a credit card might offer 100,000 travel points if you spend $5,000 in the first three months. I gave into this advice and opened up four new credit cards in one year, often spending more than I needed to meet that minimum and not being able to pay it off ... which led me to get hit with high interest rates on the remaining balance month after month.

One card that promised 50,000 points if you spent $3,000 in one month ended up costing me more headaches and money than I ever imagined. I spent the $3,000 but couldn't pay it off, and ended up having to pay a 14% interest rate. Plus, the 50,000 points barely bought me a one-way plane ticket.

I learned the hard way that the best time to open these rewards cards is when you have the money in the bank and you have a big purchase to make anyway (such as furniture or a big trip coming up). If you can't pay off the balance, you shouldn't open it.

3. Max out my 401(k), no matter what

I got on the retirement fund train later than most people (a mistake in itself) but when I finally decided it was time to open up a 401(k), right before I turned 30, an accountant I was using at the time told me that I should max out the 401(k) so I could catch up to people my age who had been contributing since their first job at age 22.

Without thinking too much about it, I practically drained a ton of the cash from my savings account (around $18,000) and stuck it into my 401(k). Sure, this seemed aggressive, but I reasoned that when I hit the age to retire, I'd be doing myself a major favor if I put that much into the account now.

The mistake was that I couldn't actually afford to drain my liquid savings. Early the next year, I didn't have the cash to move, and paid thousands of dollars in interest when I had to use credit cards to bridge the gap. Plus, I had a big tax bill I couldn't cover, leading to even more money in late fees. The cash I'd stuck in my 401(k) would have helped make these situations manageable.

Before putting all of my spare cash into a retirement fund, I should have considered the next few years first. Now, I'd tell anyone to put what you can into your retirement savings, but make sure you have a cash emergency fund, too - maybe even in a high-yield savings account. 

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