Concerned about the number of posters giving bad financial advice

[flipent]

I've seen a few threads recently where posters are concerned about debt and their financial situation.

I am really concerned with the number of people giving dreadful financial advice. The worst has to be 'consolidate you debt with a re-mortgage'.
This is terrible advice and no one should ever turn an unsecured debt into a secured one.

The lack of financial education in general is terrible and is why so many people get into difficult financial situations - but some of the advice is dangerous.

Bad financial advice can cost more than money. I don't know why anyone would take advice from strangers on an Internet forum.

No, also a very good point! But coming looking for advice and getting told to put your house at risk is very scary.

I completely agree - most of the financial advice given is very poor and just based on posters personal opinions vs actually providing any kind of real advice.

I think it’s made worse by the way the forum just lists posts in date order too - you can’t pick out among the information what is seen as ‘better’ or ‘worse’ advice.

It is very different to eg Reddit where their personal finance community/ies has hundreds of thousands of contributors - and advice is rates up or down by users. Use these regularly and you see it’s the same advice again and again - so the tool works, and the top contributors are kind of hobbyists who are passionate about it.

Mumsnet financial advice on the other hand seems to be based on often the emotional rather than rational. The number of people advising to prioritise paying off your mortgage or ploughing any free cash into a pension - when these aren’t often the best answer to make yourself better off. Yes it might feel good to have no mortgage, but it isn’t necessarily the best thing to do.

I am no financial expert myself - but on 99% of threads to do with personal finance of any kind I see multiple posts which are just clueless.

There's also appalling medical and legal advice here. But if you ask a Mumsnet chat forum instead of a professional, I have little/no sympathy if you act on shit advice.

@MidnightPatrol Completely agree.

@ArtTheClownIsNotAMime I just worry for vulnerable people who come looking for help and don't realise that this is not the place to get advice on medical / legal / financial issues.

If someone is so vulnerable that they think Mumsnet is a source of qualified, professional advice, they wouldn't be able to sort out a re-mortgage anyway.

You should see the medical advice given!

In the end, it is down to individuals to make their own decisions about these things. Few will appreciate being told that they are giving terrible advice.

I find the best thing to do is post links of reliable sources of advice.

You don’t always get any choice about turning unsecured debt into secure debt the lenders if it’s over a certain amount can apply to put a charge against your property

I do debt counselling and am a trained accountant and I never advise consolidation of debt, far better to pay off highest interest first and seek advice on getting a payment plan if needed! There are situations where a consolidation loan is right but not something to be suggested over the internet without looking in detail at a situation

Heart surgeon here, I advise you to not believe the claims made by posters.

Hard agree! There's also a lot of bad advice about benefits too. I've complained to mums net in the past about that and asked why they put disclaimers to the effect at the top of some threads but not others. Although I don't think I've seen any disclaimers for a while so maybe they've removed them altogether?

Agree and also legal advice on divorce

That's actually quite rare in practice, and probably disproportionately expensive for creditors for most consumer debt. There's also the potential bad press of the 'we lost our home over £10k unpaid credit card debt' sad face newspaper articles variety.

OP I agree. MN is quite poor on anything financial in a lot of cases and anyone saying anything sensible is usually drowned out by the 'overpay your mortgage, you'll save thousands' obsessives (spoiler, you don't unless you've got a terrible mortgage deal and make no effort whatsoever to get a decent return elsewhere), see an IFA, in most cases completely unnecessary or the people who think they have no room to cut back while at the same time spending twice the national average on just about all aspects of their spending.

At least these days someone coming on here for advice on investing a £70k inheritance in a buy-to-let has a decent chance of being told they're insane... only to be advised to stick it in Premium Bonds instead.

In all seriousness OP, I've been watching the same thread as you and the debt consolidation posts aimed at the balance transfer tart. The level of financial literacy is astonishing to begin with, but also a lot of people hang on to outdated ideas for a very different situation in a very different world too.

But equally, some people really don't help themselves either. There's the half-arsed disclosures, the heads in the sand, the wilful denials of reality, the sense of entitlement; sometimes, even people who know what they're talking about can't begin to analyse the problem, never mind come up with solutions.

The problem with the advice to never consolidate high interest unsecured debt is its coming from an assumption that you'll default.

If you have a relatively manageable amount of debt, but its on a credit card at 27% apr, and have a mortgage thats well within your affordability, but do not have liquidity today to pay down the credit balance in full, why on earth is it a bad idea to use a bit extra mortgage borrowing at 4% to get rid of debt at 27%?

Its only a bad idea if you are completely back to the wall & it puts you at risk of not being able to pay the mortgage.

If you go bankrupt the official receiver can have your house sold to pay your debts anyway, even those that aren't secured against it!

@Peridoteage by the time you're in the situation of wanting to consolidate, it's often because you haven't controlled your spending. So consolidate and then rack up the credit cards again.

Like everything, the devil is in the detail and how the debt was accrued is as important as anything else.

Financially illiterate people who have kept spending on credit assuming it will all work out eventually should not be consolidating.

Financially illiterate people who have kept spending on credit assuming it will all work out eventually should not be consolidating

No - but then the advice there seems to be to do things like agree plans with your lenders, try to get some debt waived etc

I think these financially illiterate people don't realise any of those actions will completely fuck your credit record, long term. Good luck ever getting a mortgage or car loan.

Yep! Drives me mad!
It's either put it all on your mortgage or enter into a debt management plan which will f@ck your credit file for years.
They always mention a DMP even when the post states they can afford to repay the debt, it will just take years.
DMP's aren't always the best option

But also people need to be made aware:

• any answer that isn't paying everything you owe back (so things involving getting some written off etc) - will FUCK your credit rating to the extent you can't even get a cellphone. Like you don't just get to have your debt reduced for free with no consequences. You have to pay it all, timely, or you are fucked, so you may as well try and pay it cheaply.

I'd say it's a pretty even split with good and bad advice. My niggle is when people advise people to buy Premium Bonds instead of maximising an ISA or / and investing.

I've always thought financial skills should be taught at schools (maybe it is now, I don't have kids).

I've always thought financial skills should be taught at schools Given that so many go to university now, they should know how to budget and how loans work.
I think that it's something parents should be teaching their children, but many parents don't teach their children basics (hand washing, brushing teeth etc).

Going back to my own schooldays we were taught how simple and compound interest work in Maths. I figured out how to budget from pocket money.

I think there's a limit to what can be expected of teachers, and my and DC's schooldays weren't recent. I'd expect something like someone giving a talk on budgeting and loans at least.

Financially illiterate parents aren’t in a position to educate their kids though.

I’m always shocked at how little people know about pensions. I gave up on the threads on here as just corrected the fanciful nonsense was just too time consuming. Sometimes I’d get accused of making stuff up, when talking about proper sensible planning.

Agree with the above, I've been scarily in debt a couple of times and thankfully past me reached out to MSE debt forum and Stepchange rather than going down the secured borrowing route, my credit record might have been temporarily shot but that was a good thing.