How to Choose Faith Over Financial FOMO
Over the past year and a half, we’ve all gone through a lot of disruption. Most of us have had many opportunities to ask ourselves: Is this really how we want to live? Periodically taking stock of your lifestyle is wise. But sometimes a little healthy questioning can tip over into chronic discontentment, especially if comparison to others starts to enter the picture.
When “How can I make my life better fit my values and goals?” starts sounding more like “Why isn’t my life as great as The Joneses” or “Wouldn’t I be happier if I just bought this one thing?” we know we’ve got some readjustment to do. This kind of FOMO (Fear Of Missing Out) can do a real number on our ability to make wise financial decisions.
As we’ve been talking to our clients about their faith and financial lives over the first half of 2021, we’ve found four common areas of FOMO struggle: home buying, meme stocks, cryptocurrency, and vehicle purchases. Let’s look at how staying grounded in faith and time-tested financial principles can stop FOMO from influencing your next big money move. When you choose to trust God with your finances and your future, you can keep your wits about you when FOMO strikes.
“And with all his abundant wealth through Christ Jesus, my God will supply all your needs.” — Philippians 4:19 (Good News Translation)
Whether you’re a habitual Zillow surfer or have just heard the neighborhood chatter, you know: home prices are through the roof right now. Prices started to spike even before the pandemic and have been going up ever since. At the same time, being stuck at home during the pandemic has given folks the moving bug. The combo of home-wanderlust and limited supply has created a market where houses are selling in less than a day. The FOMO is serious: How can you make a thoughtful, prayerful decision when you’re afraid you’re going to get outbid in a matter of hours?
We tell our clients the same wisdom applies whether we’re in a global pandemic or not: It’s always better to buy low and sell high. Right now, it’s very difficult to do anything but buy high. We are counseling our home-buying clients to search out undervalued properties, not get into time-sensitive bidding wars, and make sure their reasons for moving are solid (Is God leading you to a new city? Is your current home truly unliveable?). The same goes for vacation homes: Don’t let your pandemic frustrations propel you into buying an overpriced second residence. Stay calm. Stay smart. (If you want to know how to buy a vacation home the wise way, stay tuned: We have a blog post on that subject coming up soon!)
My family had its own version of “Love It or List It,” play out this past year. My wife and I were considering a move in January of 2021, but when we saw prices spiking, we decided to remodel our current home instead. We were able to update our house for much less than we would have put toward a sky-high home purchase. We love it now, and we’re glad we didn’t get swept up in this sellers’ market.
Speaking of sellers, we are also telling clients thinking of selling to be cautious. Yes, you can probably get a nice sale price, but selling now may only pay off if you’re downsizing, have found an undervalued property to purchase, or are willing to rent until the market cools off.
As Jonathan said in his recent post, “Is now the time to buy Bitcoin?,” even our octogenarian clients have been asking if they are missing out on cryptocurrencies. Jonathan reminds us that part of cryptocurrency’s allure is that everyone is afraid of missing out: that demand (and fear) is what is driving price increases. And, “every bubble pops.” We advise clients to stick to their long-term investment plans, and not get carried away when reading stories of crypto-teenagers making “easy” money. If you want to responsibly speculate in cryptocurrencies, Jonathan says: 1) Only invest “fun money” that has no other purpose in your budget 2) Never invest more than you can afford to lose. 3) Have a plan for when/if you’ll sell and stick to it. 4) Do your research, use a trusted platform, and don’t lose your password. 5) Understand the tax consequences of selling. His whole article is well worth the read!
First it was GameStop. Then it was AMC. Meme stocks are stocks whose prices surge because of a wave of viral interest, sometimes loosely coordinated online by activist small traders like Reddit’s r/WallStreetBets. As with cryptocurrencies, some people have made a lot of money investing in meme stocks; those are the stories you hear on the news. Some of our younger clients are asking us if they should get a Robinhood account in order to jump on the bandwagon, and we tell them, no, you don’t need an app on your phone to gamble! Again, sticking to an appropriately allocated long-term investment plan is going to serve you much better than chasing fads (unless you’re an experienced day trader with money you can afford to lose).
It should be pointed out that Reddit investors actually call out a “FOMO” phase in the common meme stock cycle — this is when casual investors catch wind of what’s going on and try to get in on the tail end of the action. The selling and inevitable drop happens soon afterward, limiting the gains latecomers can make (and upping the risk for losses). In other words: If you’re feeling the FOMO, that’s a sign you’re probably already too late to the game…or GameStop.
RVs and Cars
Some stir-crazy people started home shopping during the pandemic. Others started looking for a second home on wheels. RV prices have also gone up significantly in the past year and a half. If you’re itching to hit the road, we suggest renting an RV instead of buying — you’ll save a lot of money! (We covered the ins and outs in our article “How to Glamp without Breaking the Bank,” last summer.) And if you have an RV you’re not using very much, now is a great time to sell.
If you’ve been hunting for the car of your dreams, you know that car prices have also risen due to low inventory and a chip shortage. Again, this is not a good time to buy a car. If you can make do with what you have now, stay the course! It is a great time to sell a used car to downsize or get rid of a vehicle you no longer need…but not a great time to buy. In a rare case of what we’re calling “auto-arbitrage,” one of our clients was able to sell a 2018 used model for the same price he purchased it for back in 2018! Then, he bought a car for $10,000 less and pocketed the change — we are living in strange times.
“You should each judge your own conduct. If it is good, then you can be proud of what you yourself have done, without having to compare it with what someone else has done…So let us not become tired of doing good; for if we do not give up, the time will come when we will reap the harvest.” — Galatians 6:4,9 (Good News Translation)
In all of these situations, the key is to keep your head, guard your heart, and not compare your financial choices with what others are doing. Analyze your motivations: Are you making financial decisions out of fear, envy, greed or insecurity? Ask yourself where you are feeling content in your finances and where you are not. When FOMO hits, get curious about what you’re really afraid you are missing — is it a new car, home or exciting investment? Or is it something more intangible that can’t be solved with a purchase (like more quality family time, a less stressful lifestyle, or more daily joy).
Remember: Stick to your long-term investment plan, buy low and sell high, and put faith ahead of fear.
Need help countering financial FOMO in your life? Set up a call with one of our financial advisors to start working toward confidence and contentment.