The Mindset Keeping you Poor (3 Ways to Escape the Money Trap of Bad Debt) | Shadé Zahrai

1. 0:00 – 0:30

   Economic “hurricane” warnings and why this downturn feels different

   1. SZShadé Zahrai0:00

      The JPMorgan Chase CEO predicted an economic hurricane is coming. He said, "Right now it's kind of sunny. Things are doing fine. Everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way. You better brace yourself." Then Elon Musk shares that he has a super bad feeling about the economy, and he needs to cut 10% of Tesla jobs. I don't know about you, but this is all a little concerning to hear. And while an economic downturn has been predicted for years, things have been escalating to almost bursting point. So

2. 0:30 – 1:00

   Financial anxiety, millennial pressure, and the rise of “financial FOMO”

   1. SZShadé Zahrai0:30

      of course, this is brought on by the horrific war in Ukraine, rising inflation pressures, and interest rate hikes from the Federal Reserve. But in this video, I wanna share another reason why I believe this hurricane is coming, and it has to do with our choices. The reality is three in four Americans report being anxious about their financial situation, and that's even before this hurricane gets here. A lot of them, especially millennials or those under 40, they feel like they're constantly missing out. Either they're spending money and wishing they were saving or saving money and wishing

3. 1:00 – 2:00

   How marketing, legacy media, and social media manufacture status expectations

   1. SZShadé Zahrai1:00

      they were spending. They don't wanna fall behind. It's financial FOMO. They have a fear of missing out. We also know that 40% of people between 25 and 40 overspend to keep up with their friends. Not only that, they're afraid to admit it. So what does this tell us about our society? It tells us that we have a very real problem. Here's the general gist. Legacy media and advertisers work to drive consumerism. They understand how to play into the psychology of fear of missing out really well. We're constantly bombarded with marketing messages about where we should be in our lives. Buy the house with the mortgage, get the car or two on finance, maintain that sturdy, secure job to pay off the mortgage. And then we still receive messages about what we should wear, what we should have on our wrist, where we should be holidaying. And people play into this and perpetuate it on social media. "I got the new job. I got the promotion. Look at this beautiful holiday villa I've taken my family to." It's really inescapable. And what gets people into trouble is trying to constantly keep up, because what does trying to

4. 2:00 – 2:31

   The debt-fueled status treadmill: buy-now-pay-later and living beyond means

   1. SZShadé Zahrai2:00

      keep up mean? It means spending more money, and it's usually money you don't have, so you end up in a lot of debt. But that's okay because I have the house and the cars and the holiday coming up... on borrowed money. And these buy now, pay later schemes are getting a lot of people into a lot of trouble, putting them into this tailspin of living beyond their means, trying to keep up with the Joneses. It's social one-upmanship in materialism. I need to keep up with my peers. They end up on this never-ending socialized status treadmill of unhappiness.

5. 2:31 – 3:02

   Breaking the spell: “Matrix” thinking and questioning the collective script

   1. SZShadé Zahrai2:31

      What people don't realize is that they're buying into a collective unconsciousness, where they're repeating patterns of behavior that the masses are almost programmed to accept and follow. It's like The Matrix. Once you take the correct pill, you finally wake up and realize, "Hold on a minute. Why should I buy into living a life of perpetual debt to buy things I don't want to impress people I don't like?" So how has the pandemic magnified FOMO? Well, as a species, we evolved for thousands of years in tightly knit communities where we've supported each other

6. 3:02 – 4:06

   Pandemic loneliness and herd behavior: toilet paper as a FOMO case study

   1. SZShadé Zahrai3:02

      and our survival depended on our interdependence. It's only until very recently in history, thanks to science and technology, that we can live very independently as individuals. Food can be delivered to our doors, and for many of us in the developed world, we're safe from danger to the point that we no longer know who our neighbors are. There is a huge disconnect. The pandemic exasperated this mass loneliness for a lot of people. Their only form of human connection became through social media, which distorts your reality and your ability to connect. It also led to some interesting behaviors. Near the beginning of the pandemic, an unassuming household item suddenly became one of the most prized commodities that people started hoarding like never before. Toilet rolls. Why were people all over the world hoarding toilet rolls? The experts called it FOMO. People would see what others were doing online, and they had FOMO. They didn't want to miss out. One guy was charged with stealing 400 rolls of toilet paper because apparently the worst doomsday scenario was being stuck on a toilet and finding yourself down to one last square.

   2. SPSpeaker4:05

      Oh, no.

7. 4:06 – 4:37

   FOMO in markets: Robinhood retail trading, meme stocks, crypto, and volatility

   1. SZShadé Zahrai4:06

      Now, let's talk about the stock market. One of the most obvious impacts of the pandemic on fear of missing out is the stock market. A lot of people had a lot more time because they were at home. And because of the economic uncertainty and the government stimulus checks, they had extra cash to invest in the stock market through apps like Robinhood. They made it very easy. So what we saw was this rollercoaster ride of stocks going to the moon and then crashing sub-zero like we've never seen before because these retail investors were getting into that fear of missing out. Meme stocks

8. 4:37 – 5:37

   NFT mania and the “hot potato” problem of inflated value

   1. SZShadé Zahrai4:37

      like GameStop and some cryptocurrency. All Elon Musk had to do was mention Dogecoin, Doggy, Doggycoin, however you want to say it. He would tweet about it, and its market cap would go through the roof. And then we have NFTs. People are making uninformed decisions to buy a piece of code or a JPEG or a digital art made in 2008 that has no real value to humanity, only inflated values. And the only reason someone made money is because someone else lost $50,000. In fact, some guy bought Twitter founder Jack Dorsey's first-ever tweet as an NFT for 2.9 million last year. He listed that NFT for sale again at 48 million earlier this year. It ended up with a top bid of, wait for it, $280. How can something's value drop from 2.9 million to $280? It's really a game of hot potato. Again, this highlights how the pandemic has amplified extreme speculation, which exasperates this FOMO trend. The important thing to be aware of when it comes

9. 5:37 – 6:37

   Why FOMO never satisfies: “bad happiness,” instant gratification, and financing illusions

   1. SZShadé Zahrai5:37

      to FOMO is that you will never be satisfied. What FOMO promotes is something called bad happiness. It's like a pageant. It's fleeting. You're thrilled for a split second by the instant gratification in the moment, but then it's gone. So you need the next hit, and you quickly find yourself in this perpetual cycle of chasing thrills. That car you got two years ago on finance, it's no longer enough. You need the latest BMW. Just as an aside, most people who buy new cars don't own them. At the end of 2021, 81% of all new car purchases in the United States were on finance. So essentially, it's all an illusion. In a paper published early 2018 looking at over 2,000 people with a net worth of at least one million, every single person said they'd need at least two to three times more money to be perfectly happy. I mean, seriously, how much money do you need to really be happy? When I started earning a decent salary after graduating, I didn't rush off to max out my credit cards with new outfits, handbags, and the latest smartphone. I

10. 6:37 – 7:07

    A personal alternative: delayed gratification, living within means, and investing over ‘stuff’

    1. SZShadé Zahrai6:37

       was fine with my little Hyundai. I still shopped at thrift stores. I didn't eat out. Even though I had a good position at a major bank, I chose not to get a credit card until years later because I didn't want to train myself to spend money I didn't have. Even my husband and I made it a policy to live within our means and to delay gratification. Now we're able to live a comfortable debt-free life because we didn't fall into the debt trap, and we enjoyed the process of building as opposed to the instant gratification of buying now and paying later. We

11. 7:07 – 7:37

    Debt as lost freedom—and why rising rates could trigger a larger crisis

    1. SZShadé Zahrai7:07

       prioritized investing and building net worth instead of accumulating stuff. When you become trapped by FOMO and your debt levels become out of control, you no longer have flexibility in life. You lose your freedom. You're not able to pivot, change direction, go for another career pathway because it's too risky. You've put on a ball and chain keeping you stuck, and this is why the hurricane is coming. People bought in so much to the artificial fiscal and monetary stimulus and living the debt lifestyle, so now we're in unprecedented

12. 7:37 – 10:26

    Three ways to escape financial FOMO: independent thinking, courage, and ‘joy of missing out’

    1. SZShadé Zahrai7:37

       territory. There is so much risk in the system that we're looking down the barrel of the 2008 financial crisis on steroids. Even the threat of the Fed raising interest rates slightly is sending shivers down the spines of investors and everyday people. So what can you do to avoid making one of the biggest mistakes of your life and getting stuck in financial FOMO? Well, here are three recommendations. First, see things through your own eyes, not through the eyes of others. Independently investigate the truth for yourself. Don't buy into the hype and the mass media rhetoric. Question everything. Does it really make sense to go into a buy now, pay later debt for things that you don't need when you're almost already at the limit of monthly repayments for student loans, rent, and your car finance, and you're trying to save for a desperately needed vacation? Be smart, be wise, and use your discretion. Second, have courage. Find the courage within to step back and look at reality and make a decision to live within your means. Be comfortable with not going into debt to possess things to impress others. Then when you're on your first step of freeing yourself and protecting yourself from the financial FOMO trap, whether you're investing in stocks or buying property, it will help you be more rational. Learn to become content with what you've achieved and what you have rather than being fixated on what you wish you had. And third, move from fear to joy. Grab a blank sheet of paper and draw a line down the middle. Write all the things that you fear you're missing out on in that left column: that flashy new car, the dream wedding, the bigger house, the designer watch. On the other side, write down the joy of missing out on that. For example, I'll have a larger savings account so I can put a bigger down payment and reduce my monthly mortgage for peace of mind. I'll get to really enjoy that vacation when I go without draining my bank account and putting it on credit and then spending the next six months paying it off. I don't have to worry about keeping up with the latest fashion trends. I can go check out that trendy new thrift store uptown and make vintage fashionable again. Most importantly, I won't feel that incessant stress and the anxiety that follows me, and I will feel good about who I am and the choices that I'm making for my own wellbeing. And hopefully, there'll be a ripple effect where you might just positively influence the people around you. Maybe your role is to give others permission to do the same and start to see the world through their own eyes, too. That brings us to the end of this episode. I hope it resonated and you found value in it, and I hope you and your family will be safe during this hurricane. If you found value in it, please give this video a like. And if you're not already part of the community, hit the subscribe button and the bell icon to be notified each time I share a new video. Let me know in the comments what your thoughts are on financial FOMO. I'd love to hear from you. Thanks for joining me. I'm Shadé Zahrai. I'll see you next time. [outro music]

Episode duration: 10:26