How to Prevent Turning Into a Financial Zombie
Yes, with the popularity of zombie movies, zombie apocalypse events, and zombie costumes, I feel like a bit of an ambulance chasing attorney in posting this, but I think it’s relevant and, well, fun.
They are among us… the financially undead. Their credit rots, their wallets are always empty, their debt stinks, and their savings have long ago decomposed. They have no financial thoughts or awareness of what a financial life truly is or should be. They exist solely to spend money based on impulse.
Have you ever wondered if you (or a close family member) were a financial zombie? Okay, probably not, but please humor me. If you recognize yourself in any of the following statements, the chances are pretty good that you are (or have been) counted among the financially undead?
Below are clues you might be a financial zombie and what you can do to prevent or cure yourself from infection:
You lease a car or truck because you can’t afford to buy one.
One of the primary characteristics of the undead, financially or otherwise, is that they don’t think. Instead, they act on impulse. They seek what they crave. Such is the case with those who lease a car for personal transportation. If they could possibly take a few minutes to think about the arrangement, they would quickly realize that they are essentially renting a new vehicle every three years or so, never owning or being able to recoup any of the vehicle’s value as an asset.Rather, they simply crave. In this case, they crave a larger, newer, nicer, more luxurious, etc. vehicle than what they could otherwise afford each month given their income and/or savings. even the argument of driving a more dependable car has no leg to stand on (like a battered old zombie), since most cars today are warrantied for at least, if not more, miles than are permitted on leased vehicles.Come on, people, um, I mean all you “unbeings,” let’s stop fooling ourselves. Leasing a vehicle for personal use is a horrible financial option in almost every case.Have a great day!
You purchase something because you’ve seen it on a reality show, a commercial or a billboard.
Like clue #1, this clue that someone is a financial zombie has to do with their lack of conscious thought.Also, as is well documented, zombies have excellent hearing. They hear and they react, they are attracted to noise.And what better example can we cite of financial noise than television, radio or Internet commercials, billboards, and other forms of advertisements? When a Financial Zombie hears an ad say that a particular article of clothing is “to die for” (don’t worry, the phrase can’t offend the unthinking undead), or that a new fast food sandwich is truly mouth-watering (now we’re speaking zombie talk), they hear, they react, and they head off to the store or restaurant to make what is likely an unaffordable purchase.To counteract this infection, try making fun of the advertisements (we all know that the undead can’t stand humor). Seriously, ask questions like, “What is this ad saying about their product?” “Will that drink really make me more attractive to the beautiful ladies?” “Will that car make me more successful?” “Will driving that big truck make me a tougher man?” “Will my baby really be happier and more sanitary with diapers that have cartoon characters on them?” Speaking of, please involve the kids when they’re around, so as to inoculate them against future infection.To provide a bit more strength against the draw of the advertisement, try writing down one or two short-term financial goals and keep the handy (although not all zombies are able to keep both hands long into their decaying state). Write them on a small card that you put in your wallet or purse or on your fridge or nightstand. Look at it regularly, and you’ll be more likely to place the advertised items in their proper place on your goal card: at the bottom!
You believe that budgets are too restrictive or only for those in financial trouble.
As we all know, zombies, while they don’t technically feel, have an instinctive drive to break free from any restrictions (locked rooms, coffins, movie screens) to seek out, um, well, er, let’s say “sustenance.” Likewise, Financial Zombies act against restrictions, such as budgets and credit card limits. This is the case, even though the rest of us (the Financially Living) know that budgets are tools and guides to help us identify what is most important to us that will require money to purchase. As for credit card limits, financial zombies (and I was definitely a financial zombie throughout my 20s) consider them targets rather than ceilings to avoid.The problem is, the Financially Undead use no reasoning to realize that budgets are simply plans for how we want to spend our money. The Financially Living, if they start to feel restricted in their spending, will often insert into their plans a few dollars ($5 to $50 or more, depending upon their financial circumstances) to spend however they so choose during the month. I call it “Fun Money.” Others may call it splurge money, mad money or guilt-free money.Whatever the name, it can help overcome the sense of restrictiveness so often associated with budgets… er, spending plans.
You have applied for a credit card so that you can build your credit.
Let’s admit it. There’s no reasoning with zombies. Likewise, we often have difficulty making heads or tails of the actions of Financial Zombies.I’ve seen Financial Zombies apply for credit card after credit card in an effort to build credit, then be, um, what’s a good word… dumbfounded that their applications are denied because they don’t have good credit. I see the dismay in their faces, “How are we supposed to build credit if we have to have good credit first?”To begin with, good credit is a means or a tool, not an end in and of itself, and zombies are not generally good with tools. All they see is the end. If a Financial Zombie has mistakenly taken credit to be a goal rather than a tool, it’s no wonder they’re befuddled.The end or purpose of good credit is to qualify for the best possible loan rates for a home purchase (I would prefer we didn’t borrow for cars and other depreciating assets). With that as the purpose, we need to approach the building of credit with better planning (again, not a common zombie personality trait).Here are a few ideas that can, if implemented, have a positive influence on our credit rating. These are generally in order of easiest and cheapest to more involved and those that include fees and interest.
Ask our utility companies and cell phone company (if we’re on a contracted service plan) to report our history of on-time payments to the credit bureaus. They can do this as a service to us, so we should be polite and nice in our request.
Particularly for young adults, consider asking a parent or relative with good credit to add you to their credit card account as an authorized user. For a good explanation of the impact of such an account on our credit, check out Experian’s blog post on the subject.
When applying for a line of credit, consider beginning with a tire and brake store. Many have internal financing that is much easier to qualify for than major cards. I usually suggest that you save up your money for the tires or brake service ahead of time, open the account, then consider paying it off quickly (even with the first bill) if not immediately to avoid their high-interest charges. Granted, you won’t have a long history of monthly payments, but having an open account in good standing with $0 balance is typically a positive step. Just be aware that some tire stores use national banks for their financing, which is the equivalent of applying for a major credit card.
Another type of credit that is fairly easy to qualify for is store or retail credit card. Retail stores (large department stores, clothing stores) and gas station cards that have their own financing (not a Visa, MasterCard, American Express or Discover) typically have lower requirements for their qualifications. However, they do also typically come with some pretty high-interest rates.
Look around for a secured credit card. Here’s a good explanation at Bankrate.com about secured cards. Just be aware of their fees, and get it in writing that they will actually report your credit usage to the major credit bureaus.
Research a credit builder loan at a local credit union or bank. They come with fees, and typically you don’t get the money until AFTER you’ve paid off the loan (usually about 12 months), but they can help you build a history of on-time payments.
- If you’ve been a Financial Zombie with your credit, consider giving these suggestions a try (though no more than 2 a year). You might even be able to bring your credit back from the undead!
You have opened a store account in order to get a discount on your first purchase, then made only minimum payments.
Why do stores offer 10% or 15% discounts on purchases if we open a store card with them? Simply put: to make money, of course!Stores know that a large percentage (usually around 60% to 70%) of their customers who open up a store card will end up carrying a balance on that card from month to month and will, therefore, pay interest on their account. That means that their money is making more money. Why wouldn’t a store move in that direction?In an age where probably half of the revenue earned by a furniture store, a department store, a technology, and entertainment store, an appliance store, and even a car manufacturer comes from finance charges, we need to expect them to offer us small, one-time discounts in exchange for an “unlifetime” of financial zombie servitude to them as creditors. It seems that car companies are no longer manufacturers who sell vehicles but rather financiers who happen to sell cars. The same can be said for just about any major consumer product manufacturer.So here are my top tips for all Financial Zombies drawn to such gratuitous offers of “killer” deals on credit:
- Just say “No” to begin with. Recognize that putting the purchase on credit, unless you’re extraordinarily (meaning far beyond average) disciplined, you will likely spend much more in interest charges than you have saved on the cashier discount.
- If you do accept the offer, pay it off immediately, as in, well, immediately. Don’t leave the store until the account is paid in full. Some stores allow you to make a payment on store accounts right there at the cashier. Others require you to go to their customer service desk. Either way, since you were planning to pay for the purchase already, take an extra minute or two to pay your new account back down to $0.
- Shred the card when it arrives in the mail. Whatever you do, do NOT carry it in your wallet or purse. Cards in wallets and purses get used, and that means we will end up paying additional interest.
If you struggle to overcome the “infection” that leads you to accept all discounts offered, commit to yourself now that you will never become a Financial Zombie wandering from one store card to another. For the vast majority of consumers, these credit accounts are not worth the purchase savings, and for a smaller group of consumers, these offers are actually highly destructive forces in their financial lives.
You carry a balance on your credit card because you can’t afford to pay it off in full.
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 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, a 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!
You wait until the end of the month to decide how much money you can save.
Regardless of the class size, the demographics of the participants, or the location of the workshop, every time I ask, “What does human nature dictate that we do with money in our checking account at the end of the month that we haven’t spent?” I get the same answer, “WE SPEND IT!”However, it is more likely than not the there will be more monthly left over at the end of the money than there will be money left over at the end of the month. For households is such predicaments, putting a few dollars into savings at the beginning of the month will likely not only not make the spending issue worse, but it may even improve our spending. It is also human nature that we adjust our spending to whatever amount of money we have at our disposal. So, if we remove our a few dollars for savings from our checking account at the beginning of the month, we will adjust our spending for the rest of the month.No matter how much money we make (or don’t make), we all have a million dollar wish list (you know, that mental list of 36,000 things you would do if you won a million dollars). Some of the items on the list are huge (travel, homes, investments), while others are small. These small expenses are the ones we spend our “end of the month money” on if we do have not already made other plans for it.Let’s cure the financial zombie virus within each of us by creating a plan for saving money. Getting started is more important than figuring out how much we need to save. Yes, the goal may be 10% or 15% or 20% of our take home pay, but even $5 a month will at least place us on the right path.Successful Savings Happens at the BEGINNING of the Month!
21 Bonus Clues That You Might Be A Financial Zombie
- You have purchased something from a telemarketer.
- You have borrowed money from a payday, title or pawn lender or as a tax refund anticipation loan.
- You wish you had a car or home as nice as your sibling’s, a friend’s or a neighbor’s.
- You’ve bought something you thought was totally cool but still feel unsatisfied or empty inside.
- You get excited about payday.
- You can’t guess within $1,000 how much non-mortgage debt you have (car, credit card, store card, etc.)
- You use a student loan to pay credit card debt, go on a road trip, or buy a vehicle.
- You use a home equity line of credit to pay credit card debt, go on vacation, buy gifts, or purchase a ski boat.
- You don’t think about how much your vacation will cost until you’re actually ON vacation.
- You get a chance to buy tickets to a big game or concert, and you immediately know that you’re going to put the purchase on a credit card.
- You have no idea what your credit card APR is.
- You’re nervous at the checkout stand because you don’t know if your debit card purchase will be approved or denied.
- You haven’t balanced your bank account in more than a month.
- You’ve never balanced your savings account.
- You aren’t even aware that you can “balance” your credit card statement.
- You believe check cashing services and money orders are cheaper and/or better options than a checking account.
- You think yard/garage sales are great times to boost your income.
- You do your grocery shopping on your way home when you’re hungriest.
- You regularly buy lottery tickets.
- You give your credit card number or social security number to telemarketers.
- You figure that if you can’t meet your car payment you’ll just drop the car back off at the dealership or bank and be done with the debt.
While the premise of this article was a bit tongue in cheek fun, it’s true that one likes the idea of becoming a zombie, so why do so many of us keep ourselves within the ranks of the financially undead? Our credit is rotten, our finances stink in general, and savings funds are decomposing before our eyes. Yes, we continue to move from one spending opportunity to another, ever seeking to satisfy that which cannot be satisfied: the emptiness of consuming for consuming’s sake.
Do You Have Questions About Financial Zombies?
We check our articles and blog posts for new comments and make it a priority to respond quickly.
If you’d like more information on how to prevent becoming a Financial Zombie or have any other questions about improving your financial picture, please feel free to comment below and we’ll answer right away!