I’m going to let you in on a little financial secret. In America we’re all sheep mindlessly following the crowd to our financial demise.
No one sets out to be a conformist, to emulate everyone else. It’s a natural by-product of being human. We’re social animals by nature.
While we may laud individuality, we crave conformity. There’s comfort in conformity. It’s easy. If everyone else is doing something, it must be OK.
The crowd defines the norm. Who are we to question, to buck the trend?
And so we follow the crowd, making irrational financial decisions because the crowd has given these irrational behaviors a stamp of legitimacy.
The crowd thought home values would skyrocket forever. Everyone from the accountant to the truck stop waitress became a real estate investor overnight. They took on risky interest only mortgages to fund their dreams of real estate riches.
Millions more used their homes as piggy banks. Money from home equity loans was spent on everything from new cars to fabulous vacations.
But when the mortgage crisis hit, the landscape was littered with the carcasses of foreclosures and broken dreams.
The herd told us that debt was no longer a four letter word. Though it may be considered folly to buy things with money you don’t have, the herd told us it was acceptable. Credit cards became the American way, even though 50 years prior a credit card was a novelty.
Now in the midst of a recovery from one of the worst economic crisis since the Great Depression, millions of households find themselves suffocated with unbearable credit card debit and annualized interest rates of 29% or more.
A funny thing happens when we follow the crowd. We lose perspective. We forget to think for ourselves. We stop challenging the conventional wisdom. If others are doing it, it must be the right thing to do.
But remember, sheep get slaughtered.
The Secret to Financial Success
The secret to financial success: Think differently.
Be a maverick. Refuse to blindly follow the crowd.
The crowd extols shopping as a form of entertainment. Retail therapy has become a way to relieve our stress, solve our problems, or escape the pressures of the world. Mavericks know it’s a fool’s game to shop for entertainment. There are cheaper ways to have a good time.
The herd lauds plastic. The herd declares it’s OK to spend money you don’t have. Rebels understand that you spend up to twice as much when you use plastic. So even if you pay your bill in full every month, you still lose.
The flock finds that eating out is the only way to survive in today’s hectic climate. Nonconformists realize that not only is fast food a full on assault to our health, but eating out is also quickly draining our pocketbooks.
The crowd says it’s OK to spend a fourth of your income on new cars every few years, and worse yet, to even consider leasing. Renegades know it’s insanity to spend more and more money on an asset that only decreases in value.
The group lauds large home in fine neighborhoods as the ultimate sign of success. Independent thinkers realize the folly of buying more house than you need, at a price you can’t afford, with additional heating, maintenance, and taxes you weren’t expecting.
Become a Maverick
Two roads diverged in a wood, and I took the one less traveled by. And that has made all the difference. – Robert Frost
Being a maverick means having the courage to notice the insanity of the crowd and taking a different route.
Conventional wisdom gets you conventional results, – massive debt, inadequate retirements, a treadmill of work to pay the bills. Following the crowd leads to financial ruin. Financial freedom is yours only if you refuse to be part of the herd plodding along to fiscal slaughter.
Yes, it can be difficult, downright frightening to do things differently. Leaving the safety of crowd leaves you vulnerable, doubting yourself.
Taking your lunch to work when others spend money at street vendors or in the cafeteria may make you stand out from the crowd.
Spending a quiet evening at home with the family playing a board game instead of taking the family to a movie may seem a little old fashion.
Stopping by the library to pick up your reading material and videos for the kids may not be as glamorous as shopping at Barnes and Nobles.
Yet, by going against the crowd and doing things differently, you create a brighter financial future. More importantly, you avoid the slaughter that awaits the herd.
BMWK, have you ever made a financial mistake by following the crowd?