A zombie apocalypse is here, but did you know we can fight it with a money mindset?
A money-driven mindset means that all financial decisions – from student loans to financing children’s colleges to buying a car or a house – are made against the backdrop of a broader financial goal.
In contrast, the zombie money mindset lacks the context for such a goal and prioritizes the act of buying in the present. This delegitimizes the importance of saving and investing for the distant future or of managing debt wisely.
Last week’s column on student loans touched on an issue close to home. You can easily detect my frustration with the complication of the program and my own attempts to simplify it. But you can also feel my own desperation to wake people up. This desperation is a trigger for my own spent money mentality.
I was a sleeping zombie over my finances and racked up student loans I never should have had from textbooks, travel, mocha lattes, pub nights, and lavish dinners.
I had also consolidated these loans after graduation at the request of the government, not even considering that the interest rates were around 2% from my first year of graduate school and over 6% from my first year of higher education. the second. I lost the opportunity to keep the 2% and pay the minimum, then aggressively kill the 6% +.
The most impressive Zombie detail? At the time of consolidation, I was not even aware of the interest rate implications.
I think of a trajectory where I didn’t get into personal finance and have continued to be in the Zombie money mindset from those previous years.
What if I had worked for a nonprofit organization and still had all of my loans and someone sent me this column? My God, I probably would have flagged the email to read it later and never realized it.
Really, I think the only way I could have read it was if someone came to my house with a bottle of wine, a bar of chocolate, a printed copy of the column and said, “Read this. I’ll wait “.
That trusted friend should then probably open up the website and start breaking it down into action items for me. So let’s face it, she probably should have sat on the phone and called the repairman with me.
Is this carefree mindset bad, though? In other words, are we entering the dangerous territory of encouraging the left brain rather than the right brain, those mathematical brains rather than the artistic brains?
It wasn’t that long ago that I was at Harvard to get my masters degree.
I hastily clicked on the “education” requirement for the student loan until I signed it as quickly as possible.
“Details schmetails” about this insignificant burden in my life. Devoting any brain power would rob the world of the shifting classes and experiences that really mattered.
Yes, my brain told me a compelling story, but it had to constantly remind me of it when I felt pangs of regret over the growing student loan balance, or when I overheard some of my classmates discussing strategies for repaying their loans. or to request Harvard equity relief for loan repayment.
Well I woke up and developed a new mindset for money. The Zombie was destroyed when I learned through practice that I could live below my means and not feel deprived. I learned that I could focus on the job I love and manage my money well. These two things were not in fact mutually exclusive.
In fact, over time, I learned the symbiotic nature of managing my personal finances well and being able to do the work that I was passionate about. As part of the overall strategy, when I found out that I couldn’t “deconsolidate” my loans, I paid them back.
After all, it was managing my money well, paying off those loans, and living below my means that gave me the financial courage to start my own business.
I want this money mentality for you. I want this for every person, and I believe it is achievable. In fact, I believe that this student loan moment could turn out to be when you embrace this money mindset.
As you can imagine, I spent the week sending the column on social media and individually via email to people who may be affected. Since my family was quarantined with covid I couldn’t come with chocolate, but I called for dollars. I asked some friends if I could phone them and their attendant.
A friend from school reached out to thank me after reading the article.
It was the first time she had heard of the announcement and was encouraged that the waiver could wipe out 6 digits of the debt. But after reading the government link describing it, she almost seemed to shrug her shoulders and say, “Looks like I would need an accountant to sort this out.”
There, you see it? This statement was an identification with a zombie money mentality. This particular story told by the Zombie Brain is that the student loan stages are only for mathematicians, for left brains.
First of all, folks, accountants probably don’t know much about this student loan program. They know taxes. Frankly, most financial advisers won’t be of much help on student loan strategies.
If an advisor needs a minimum asset level of half a million dollars to manage their money, I wouldn’t imagine there are a ton of people with six figure student loan debt and so many accumulated assets. Most financial advisors don’t come across enough student loans to wrestle with the individual details.
But all of you, if you think this is a math problem or a difficult financial problem, you are wrong. It’s a personal finance decision. As with all personal finance decisions, most of the time, if you want to get a good answer, you have to do a bit of your own homework.
Would you go to your accountant to help you with your car purchase negotiations?
While I admit the jargon is frustrating, the answer is there for anyone willing to spend some time researching the jargon on Google, asking questions about their own loans, and applying the new rules to their loans. And they are capable.
It’s the same level of research and understanding that I see people engage in when they spend 20 hours on trading tips and vehicle research nationwide trying to make an extra $ 300 on their own. car purchase. It’s the same level of research for people trying to understand the intricacies of home buying and interest rate strategies.
So where is the disconnect? Why is the same group of people willing to dig in and research a purchase, but not dealing with student loans?
Because managing student loans is managing personal finances. The initial act of home ownership of a car and a home is a purchase. It’s consumerism. Remember, we love to buy things and our economy is driven by zombie consumerism.
Shopping brightens the brain and feels good, and we can buy things more easily when there is no counterbalance to the impact of that decision on the big goal.
Unfortunately, not only does the smart management and payment of student loans fail to enlighten the brain, processing them can trigger a lot of emotions as well. This means that the long-term impact of accrued interest at 6% in a virtually zero interest rate environment simply does not show up.
Making a good decision on student loans requires a money-driven mindset with an overarching goal, which I believe should be the ability to someday retire. I can tell you that it is very difficult to save enough to support our retirement lifestyle. Add student loans now?
Last year we learned that baby boomers are entering retirement age with an average loan balance of over $ 40,000. Sometimes I worry about stating the obvious, but just in case – “People, wake up! You don’t want or need to be burdened with student loans at the age of. retirement or later. “
Since it’s Halloween week, I consider this opportunity of the Civil Service Loan Forgiveness Program as the last war in the zombie apocalypse.
For many people working for nonprofits or the government, student loans in every way are doom and gloom. They can wake up and fight, or they can stumble until the October 2022 deadline.
Sarah Catherine Gutierrez is Founder, Partner and CEO of Aptus Financial in Little Rock. She is also the author of the book “But First, Save 10: The One Simple Money Move That Will Change Your Life”, published by Et Alia Press. Contact her at [email protected]