Emotions of Money: Banks Love FOMO

packs-163497_1280Driving to Costco the other day I saw a billboard that read, “You deserve a break! $5,000 personal loan only $99 a month.” The background showed a skiier in fresh powder with a huge smile on his face.

Are your friends going skiing this winter? Or to Europe this summer? You don’t want to miss out, but you don’t have the cash. FOMO (Fear of Missing Out) takes over and you find a way to make it work. You grab a credit card or a disrupting personal loan for $99 a month.

Interest rates are at an all time low and you’re stuck in a house that’s too small or a dodgy apartment. You don’t want to miss out on historically low interest rates, but you don’t have the cash to put down enough of a down payment on your “forever” house. Because you actually believe you need that much house and you believe you’ll live in it forever (which is really rare these days). Regardless, instead of buying within your means you take the maximum the bank will allow you to borrow. This is the cheapest money we’ve ever seen and you’re not missing out on it.

You’re young, single and just out of college. These are your glory years. You’ve got to have a social life. You’ve got to live in the right part of town. Who wants to eat at chain restaurants when you can walk to eat local fare and drink craft beer? You’re determined not to miss out on your 20s.

Your car isn’t old, but it’s not new either. Maintenance expenses are surely coming. You don’t want to miss out on worry free transportation and it’s only $459 a month to lease a sweet Audi. Why not? It beats having to drive an uninspired car that MIGHT be an issue later.

Look, I get it. I’ve fallen prey to my own FOMO. I bought a brand new car in 2005 rather than spending $1,200 on a new clutch for my paid off car. Really, a new car loan, principal + interest rather than $1,200 right now. That math is ridiculous, but my FOMO trumped my math. I had a fear of spending the $1,200 and the car having more issues later. Giving up $1,200 in that moment would have cost me an upcoming trip and some of my social life.

We’re looking to buy a house here soon and FOMO is coming back in full force. We can live well within our means and buy something decent and quite comfortable, but banks will approve us for over $500,000. Are you kidding me? Half a million dollars!!! What kind of house can I buy with that kind of money? We could live in the exact neighborhood we want. We could walk to parks and great restaurants. We could be closer to the city. We could be in a fully updated home, in a better school district, with better hopes for equity appreciation. We could have fewer maintenance headaches, more space, less clutter. But, it’s my fear of missing out on having everything I want that drives this train of thought.

Banks love FOMO. Why wouldn’t they? They make their money off of it. FOMO is often the driving force behind home equity loans, car loans, jumbo home loans and personal loans. Look, I know FOMO is typically a term used for missing out on social events, but I think it applies here. I think, generally, we are fearful of missing out on having everything we want.

Like an antsy adolescent constantly checking their phone to see what’s going on tonight, are you driven by irrational emotions, of missing opportunity, of quelling emotional tension? How much more cash will you spend or how much debt will you accumulate to satisfy your fear of missing out?

I’m learning, mastery over immediate emotions leads to long term financial, personal, physical and relational advantages and allows for a life you’ve dreamed of, and, therefore, leads to missing out on very little. It allows you to give outrageously, serve others in your community, travel the world, etc.

Look, at some time or another we are all driven by FOMO. And the truth is, we are going to miss out. But, you get to choose. You can miss out now or miss out later. Short term sacrifice for long term freedom. It’s your call.

So, how’s your FOMO driving you?

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