On October 8th, 2013, I published my first list of clues that you might be a financial zombie. I will be addressing each of those clues (11) individually plus any others posted during the month, with the goal of counteracting the financial infection.
The young man in the front row of the high school class I was teaching that day 7 or 8 years ago said it with such sincerity and such conviction, that I almost agreed with him out of hand. When I asked the question, “What is credit?” the conversation turned to credit cards, and he responded: “Credit cards help me buy things I can’t afford.”
Here’s where the zombie analogy comes into play. Zombies are well known to appear to wander about aimlessly because, well, they have no functioning consciousness (actually, they are seeking to consume the living in a futile effort to satisfy the insatiable emptiness they feel, but that part of the analogy is for another day… and perhaps an office with a nice comfortable couch). Likewise, financial zombies wander a bit aimlessly, often from from one sale or one store to another. Because they haven’t thought it through, they feel in their gut that buying something with a lower monthly payment is a better option than purchasing it all at once.
So many of us do this that it’s a major part of any big purchase we pursue anymore: “What sort of monthly payment are you looking for?” That question, asked a million times a day at car dealerships, mortgage brokerages and appliance stores across the country, feeds right into the financial zombie’s nature. If it’s a lower monthly payment, it must be good. Why else do finance companies even offer rental or lease agreements for equipment, vehicles and other big ticket items other than to appeal to our inner zombie? Granted, business can take advantage of leasing certain items to secure tax advantages.
The reality, though, is that lower monthly payments, spread out over long periods of time (such as 15 to 25 years of minimum payments on a credit card) will double if not triple the total cost of purchase, due to interest.
Let’s cure the financial zombie virus within each of us by putting a stop, once and for all, to the idea of shopping by monthly payments. Setting up monthly payments or making a purchase on a credit card because we think monthly payments are the most affordable method of acquiring something, actually means we pay more in the end, not less.
Just say “No” to shopping by monthly payment!
Please answer the following questions:
Have a great day!