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Do you focus almost solely on the present? Do you assume tomorrow will be just like today? Do you think that just
because your current behavior regarding debt has not created trouble or hardship thus far, that it won’t tomorrow or on into the future? Would you not be able to get by if debt/credit were outlawed? Really?? Then you’re an economic zombie – or perhaps even an economic idiot!
So says “Monty Pelerin” (economicnoise.com) in edited excerpts from his original article* entitled How To Identify Economic Zombies.
[The following is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Pelerin goes on to say in further edited excerpts;
Linearity describes the thinking and the world of an economic zombie – the future will be just like today.
A Simple Test For Economic Zombie Determination
The test to determine whether you or your friends are zombies is simple. Answer the following question:
How would you live if debt/credit were outlawed?
The economic zombie has difficulty comprehending the question, no less answering it. If you or your friends do, then you are well on your way toward full zombie-hood, if in fact you are not already there.
The question is relevant because it identifies those too ignorant to comprehend the fact that you cannot consume more than your income will support, at least not forever.
- Income for a period determines the amount you can spend that period, or it would in the absence of debt or savings.
- Borrowing this period enables spending to exceed income this period but borrowing is nothing but advancing consumption that otherwise would occur in a later period.
- Whatever is borrowed raises consumption this period but reduces it next period when some of the income earned then cannot be spent because it must be used to service the prior debt.
- Total consumption for both periods is lower than it would have been without the borrowing. That is due to the paying the carrying cost of debt, interest.
- If you cannot understand this concept or you believe that you can nullify it by borrowing again next period, you qualify as an economic zombie.
Osavi Osar-Emokpae colorfully described debt:
“Don’t tell me debt is not a big deal. Debt will cut off your legs and laugh at you as you grovel in the dirt begging for mercy.
- If you don’t need it, don’t get it.
- If you can’t afford it, don’t get it.
- If you’re already in debt, get out quickly.
- If you think you’ll never get out, you’re right, you won’t.”
If you are using your credit cards as loans (i.e., you are not paying in full the balance each month) then you are zombie-qualified.
Economic zombies are not born. They are made. They choose their lifestyle.
Behind every economic zombie is someone who believes he should live better than his abilities allow. That may work for a time but then the Osavi Osar-Emokpae quote takes over. The reality is that negative borrowing, that is saving, should be occurring every year. Man has a finite lifespan and a finite earning career. The latter is shorter than the former. Part of life is to be responsible enough to prepare for the future when income stops.
Borrowing is a sign of immaturity and ignorance. Occasionally borrowing is necessary to meet an unforeseen emergency. If it is routine, then you are an economic zombie!
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://www.economicnoise.com/2014/02/25/identify-economic-zombies/ (© 2014 Monty Pelerin’s World. All rights reserved.)
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Follow your gut, “When in doubt, DON’T”.
Suggestion: When you do your taxes this year, develop a plan that will either get you out of debt or close to it by next year and make it happen!
You have a better plan, please share it with us.
Thanks in advance!