Stop Allowing Fear To Guide Financial Decisions

Do you ever stop to think how many of our decisions are based in fear? I’ve been doing it myself pretty much my entire life. While there is much to be afraid of these days, I hope to find the peace to begin making financial decisions for other reasons.

Finding that peace is an uphill battle thanks to entities like the media. I’m willing to bet none of us can go through an entire day without hearing about swine flu, a terror plot, identity theft, an airplane crash, a horrific car accident, a celebrity death, or a nefarious government conspiracy.

Traditional media does a great job of perpetuating their own motto, “If it bleeds, it leads,” but they aren’t alone. New media is getting in on the act, too. One of the hottest trends on the web the last week or so involved a website that shares death risk rankings. How inspiring.

This fixation on the negative has left us all in a constant state of worry. We live in a perpetual state of fear – of dying, of going broke, of losing our freedom, of losing a loved one, and on and on. Don’t believe me? Why do you think pharmaceutical companies, especially those with leading drugs for anxiety and depression, advertise heavily during the nightly news?

I’m not just picking on pharmaceutical companies. There are a number of industries whose main purpose is to sell consumers products that make them feel more secure. From life insurance, to identity theft protection, to those make-your-own last will and testament software providers, many companies exist to help alleviate your fears.

Those companies are not necessarily bad, and most of us in and around finances generally agree their products are a necessity (at least when it comes to insurance and wills). However, this fear bleeds into other areas of our financial lives.

How many of us are terrified of applying for a new credit card, or canceling our current credit cards, because of the impact it might have on the great FICO gods? It’s sad when we allow our behaviors to be dictated to us by some secret, highly-protected, highly-complicated algorithm dreamed up to dummy down lending decisions.

This thought occurred to me the other day as I paid off yet another old credit card account, from a company that had provided horrible customer service over the years. We had already introduced the credit card to our sharpest pair of scissors, and now I was ready to call and cancel the card.

As I’m dialing the customer no-service number I remembered the same advice I’ve given here at Frugal Dad before – don’t close your oldest credit card because length of credit history is an important factor in calculating your FICO score. Same for credit utilization, which would also be affected if I canceled this card with a high credit limit.

Thankfully, at that moment my common sense kicked in and I said out loud, “Screw FICO.” Blasphemous, I know. I’m not going to carry around this old account from a company I can’t stand just because it might affect my credit score. I’ll do business with whoever I want to, and for as long as I want to. I dialed the remaining numbers and canceled the credit card.  Good riddance!

I’ve also spent too much of my life obsessing over my finances. I’ve stayed awake at night counting credit card balances instead of sheep. I’m afraid of something happening to me, leaving my wife and kids without enough to survive. Do I have enough life insurance? Do I have enough in emergency savings? Do we have enough saved for the kids college plans? Will I ever be able to retire? The list of financial worries is endless.

At some point you just have to live your life. I’m not advocating throwing caution to the wind, burying your head in the sand, or not taking basic steps to secure you and your family’s future adequately. But I am advocating that we try to sort of put things on autopilot so we can stop worrying, and obsessing over our finances.

Over the last couple years, simplifying our financial life has been a big goal for us. We’ve consolidated accounts, set up automatic transfers where possible, put retirement savings on auto pilot. Besides periodic checks on balances or fund performance I rarely look at the “big picture” stuff. I focus on winning today, and being “present” for my kids. As long as we keep winning the daily battles with money, the “big stuff” will take care of itself in time.


  1. You’re making a very important point here.

    I think it goes even further than you are suggesting. Most money advice is the product of marketing efforts. “Experts” don’t sit in a room and come up with great ideas to help us all manage our money better. They do some of that. But the focus is usually marketing. Most money advice today is shaped to serve marketing needs. To market effectively means to hit emotional hot buttons. Fear is one of those emotional hot buttons. So much of the conventional money advice is fear-rooted advice.

    When you overcome your fears about money, you become far better able to separate the wheat from the chaff in the money advice directed at you. You become less vulnerable to money advice marketing pitches. That’s a big deal.

    The key in my view is thinking through the basics carefully. You don’t need to know everything about money to overcome your fears. You do need to possess a clear grasp of the basics. If there are basic points that you do not fully understand, you need to continue to ask questions until you gain confidence in your understanding. You need to not be afraid to sound dumb. Asking dumb questions, and insisting on clear answers to them, can be the path to overcoming money fears, in my experience.


  2. Thanks for your thoughts. very good advice indeed. Giving energy to worry only gets you more of the same. Tune in (to your own mind), turn on (your intuition), drop out (of the consumerism world).

  3. Yea. I got to that point with the FICO mind freak also. I decided quite a while ago to no longer worry about it. It is what it is. And now I read somewhere that “the powers that be” are going to be “revamping” the meaning of FICO given the current state of the economy…. i.e. foreclosure madness, unemployment higher than anyone anticipated or accurately reporting…

    Is it any wonder?

  4. “Thankfully, at that moment my common sense kicked in and I said out loud, “Screw FICO.””

    Amen! It’s times like this when you start to really understand Financial Peace. It’s not about math, it’s not about your FICO score, it’s about LIFE.

    And you are absolutely right about the media. It’s one thing to have co-workers and bloggers spewing these old myths and fear-mongering, but when one of these ‘correspondents’ does a piece on the news and just regurgitates the same garbage with zero investigation into the truth, it just makes me sick and adds nothing to the conversation.

    Excellent post. We’ve been debt-free three years, with zero personal credit cards, and we’ve never felt better.

  5. Great point FD! For a while now I have been advocating this exact idea, this idea of not being worried about everything and falling into the marketing traps.

    My wife had… well still has but not to the same extent a big obsession about her FICO score, every little thing happens she would be all worried about it. The fact is that it is made up and implemented by the CC industry and works to only benefit them, and same goes with pretty much anything else.

    I have long stopped worry about things, put everything on autopilot and just go with it. Life is way too short!

  6. I’m going through some major fears right now. Fear that I’m over-stretching to buy our first place. Fear that if I don’t, I’m missing out on low rates, low prices, and a once-in-a-lifetime opportunity.

    Which I know is crazy, but it all gets in your head at once and takes over….

  7. Keeping us afraid is a good way of controlling us. This works on many levels from politics to finances.

    If we keep that credit card with lousy service and high rates because we don’t want to hurt the almighty FICO score, it’s the CC company that wins not us. I recently cancelled a card because of their bad service. Knew it might affect the FICO score, but did not care.

    I just try to lay out a good plan of action for my money and hope for the best.

  8. I’m very glad to see people here turning away from fear and looking for something worth living for. Decisions made based on fear rarely work to our benefit.
    That said, I wonder exactly what you mean by “putting [it – i.e. retirement, investing] on autopilot?” Are you talking about just regularly taking 10% (or some other percentage) out of your check and sending it to your 401K / IRA / etc via a scheduled transaction? I get a little chuckle because that’s the advice I’ve heard from so many people who fail at investing miserably. The old, “I just put my investing on autopilot…now I don’t have to worry about anything”. Uh, wrong.
    Too many people are content to sign up for whatever their employer offers, have the 10% or whatever other amount deducted per pay period, and expect to retire in 40 years healthy, wealthy and wise. Nope, it won’t work that nicely. Oh sure you’ll be better off than the person who never saves anything at all, but just like keeping in shape physically one must ‘pay the dues’ thru frequent evaluation of ones investments to see how they are performing. Then, after careful analysis and weighing the option, make your choice. Notice, this does not involve fearful, knee-jerk reactions. But it is more than just flipping the financial autopilot switch.
    I’m pretty new to your site, and your advice seems solid. I’m guessing your autopilot is more of a schedule-the-monthly-amount automatically approach but you do still monitor and make adjustments as necessary.

  9. Fear is for the weak, if they let the media alter their spending habits.

    What I really feel bad is the media telling everybody to jump on the stock market band wagon, and that is why I wrote “Get Rich in September & Buy Nothing!”. Don’t ever watch CNBC for stock advice.

    When markets go up, they say buy. Now that markets are turning, they’ll say sell!

  10. Our willingness to be intimidated by FICO scores, while accepting that the algorithms that generate them and the information used to calculate them are being kept secret from us and used to deny us access to services that are offered to others, is part of what allows banks to be so unbelievably arrogant. Our lack of willingness to collectively stand up for ourselves has taught banks that it doesn’t really matter how they treat us. They think they’ve got a monopoly on financial services, because they don’t believe credit unions exist or can be formed by people who want another alternative. Thus, poor customer service, outright dishonesty, unsustainable risk taking, and gross mismanagement of shareholder and customer assets are now considered normal. It’s so normal, in fact, that it’s actively rewarded by the federal government. In the last couple years, our government (as led by both of the most fashionable political parties) has routinely dipped into our collective pocketbook to “bail out” the improvident and dishonest, saddling our children and grandchildren with even more debt.

    I agree: FICO. And the Fed, and Fannie Mae, and any financial institution that doesn’t protect my assets or make me money.

    There’s only one gesture appropriate for individuals or institutions that have lost sight of customer goals and that routinely manipulate the system to further gouge people who want nothing to do with them.

    One finger. One direction.

    Vive la credit union.

  11. Great advice, but as soon as your get the ‘little stuff’ under control you need to take a look at the ‘big picture’ and start understanding what is the source of the economic boom-bust cycle that is behind the financial uncertainty and stress that we face.

    The answer is failed government policy, by juicing the economy with more and more money. This is the source of the problem and until we mobilize a revolution to take back the nation and vote out the bad economist, we will continue to suffer financial stress.

    Almost all personal finance bloggers make the same mistake, by trying to focus on the small stuff without looking at the source of economic troubles.

  12. All of this is incredibly pertinent to our culture – sad but true.

    I have never been much of a worry wart, and have never really been one to “regret” my decisions. I am a natural optimist and have always chosen to take personal responsibility for my decisions rather than regret them, but have found the best way for me to have a “no-fear” approach to my decisions is to include God in the process.

    This simple step of stopping and considering what the Lord would have me to do helps me decide what is truly a good decision, and what is not… then I can move forward with confidence! It’s an awesome thing.

  13. Crap, I wish I’d written this post! It’s stuff I think about all the time.

    I think that much of what drives all of this worry is rooted in…

    1) Too much information, and

    2) The misguided belief that perfection is attainable.

    We’re literally choking on more information than our minds, and even more, our emotions, can process. We worry because we don’t understand, or we don’t know how to react or to prepare for the crisis du jour. We have just enough information to be worried, but never enough to be at peace with what’s happening. Newsflash: we weren’t meant to know everything, and it really doesn’t matter.

    Calvin Coolidge said that if you’re walking down a road, and up in the distance you see 10 troubles, nine of them will have fallen by the wayside by the time you get to them. That’s a lot closer to the truth than all the fearmongering we’re buying into.

    On the second point, perfection, it’s been said that perfection is the enemy of progress. When we become obsessed with being correct, we get stuck right where we are, afraid to make a move in any direction for fear of being exposed for being wrong. We aren’t perfect so it’s a vain pursuit.

    I agree with Matt (14) that we need to leave room for God in our concerns. We can have hope, even in our imperfections, even in the midst of crisis.

    This is really an oustanding post!!!

  14. Yep. Pretty much agree with marci. Don’t subject yourself to that stuff!

    Also, who gives a rat’s behind about a FICO score if you are going to live wisely and NOT borrow any money? I don’t buy the argument that you need that score for anything other than getting MORE credit that you don’t need. Case in point: I know someone who declared bankruptcy after two luxury cars were repo’d, two homes foreclosed upon, and he went on to rent two homes (main living and vacation home) lease a new car and get a six-figure salaried job just a few months later. I’m pretty sure his FICO score was almost non-existent when he did all that.

  15. What our economy comes down to, in the end, is the aggregate results of decisions made by individuals.

    It is possible to punish a company by selling its stock or by withdrawing business. Likewise one can reward a good business by giving referrals and using more of the products or services. If enough individuals do this, both in a personal capacity and in whatever corporate capacity they control, we can and will eventually correct bad behavior.

    For too long, we’ve been collectively lying down and refusing to do even the little bit we can by being mindful of our purchasing or financial decisions. We’ve been taking the path of least resistance by not reacting when we get worked over. We’ve been effectively teaching banks to abuse us. We’ve taught them that there is no relationship between their compensation and how mindful they are of customer needs or shareholder interests. We’ve taught them that they can abuse us without losing us as customers and/or investors, and because we’ve taught them that even if we sell our shares and close our accounts, it doesn’t matter because they still have plenty of people left to abuse.

  16. Get rid of the TV and there goes MOST of the negative comments and the forced fear feeding.
    I rarely hear of all those negative things you mentioned – so I rarely worry about them. Simple as that 🙂 (No TV for me!)

  17. Yeah, who knows how they decide anything!
    We’re new to the US, so I can’t get a credit card at all – apparently I don’t have any credit here…. we have mortgage for our house but can’t get anything on a credit card, the world is weird, isn’t it? 😀

  18. i totally agree with you. fear not only cripple ones finances but also the rest of ones life. no wonder in the play Julius Caesar, he said that a brave person dies once but cowards die many times over. One has to overcome it so as to live life to the fullest. great post

  19. I fear being broke, I’ll confess. I have been thinking for a while about moving across the country (for a woman, no less), but I fear not getting a good job there, not being able to pay my debt, and struggling to get by again. I’ve been there, done that, and don’t want to do it again. I’m in a good place right now money-wise – paying off debt, affording all my bills, and having some left over for fun. I’m not entirely happy, though, and think I maybe need a change. But the fear.

  20. Another awesome post! Something to think about! Kevin (#15) I agree, the media had my brain on overload, so much attention and way too much information – the good, the bad and the suspect – will send you into a spending frenzy or money hording frenzy. Personally, I haven’t watched any news reporting programs on the state of the economy, unemployment figures, etc., in two weeks! And I sleep better.

  21. Hmm it looks like your blog ate my first comment (it was extremely long) so I guess I’ll just sum it up what I wrote and say, I’m thoroughly enjoying your blog. I too am an aspiring blog writer but I’m still new to the whole thing. Do you have any helpful hints for novice blog writers? I’d really appreciate it.