Resisting Financial Peer Pressure

Over the last few days I’ve been reflecting on my remaining debt and trying to inventory what that debt represents. If you are in debt, too, it can actually be a frustrating exercise. There were the somewhat justifiable portions of debt related to school expenses, illnesses, and family emergencies. However, I could barely account for 30% of the total debt from those types of expenditures. After surfing through old credit card statements and looking as far back as the online banking sites would allow it occurred to me most of the debt could be attributed to my failure to resist “financial peer pressure.”

Financial peer pressure comes in many forms, and from many sources:

  • “Keeping up with the Joneses.” This is the self-imposed pressure we feel to keep up with others. If the neighbor gets a new car ours suddenly doesn’t look as pretty. If our friends upgrade to a larger house we suddenly start to feel claustrophobic.
  • “Impress the in-laws.” Naturally, newly married guys have a tendency to want to impress their in-laws. We want to give the impression that their daughter has married into financial security and ease any doubts they may have about us as a provider for their little girl. I was guilty of this early on, particularly after my wife decided to stay home with our newborn in our second year of marriage. I suspected our family wondered if we could pull this off, but I was very reassuring, “Yeah…we’re doing great!” The reality was we were scraping by and failed to adjust our spending after dropping back to one income. The ensuing [tag]lifestyle debt[/tag]” accounts for a significant portion of our remaining balance.
  • “Impress strangers at a red light.” I mentioned this phenomenon back when discussing the financial hole people dig themselves by buying new cars. It’s hard to justify spending hundreds of dollars a month for the right to drive something “new,” when many times a used alternative would do just fine. Somewhere along the line we Americans decided a car was a reflection of our wealth, a sort of mobile status symbol.

Now that we have identified the source of financial peer pressure, what steps can you take to resist it?

  • Quit worrying what other people think about you. This might be the best advice for your financial future. Sam Walton didn’t care what people thought about him when he drove that old pickup truck to new Walmart store openings. Warren Buffet probably couldn’t care less what people think of his clothes, his shoes, or his accessories. I’m not suggesting we walk around looking like a complete slob, but if you want to get out from under [tag]financial peer pressure[/tag] a good first step is to stop wasting your time, money and energy on impressing other people.
  • Quit taking advice from broke people. Ever notice that the first ones to give you financial advice are the ones leveraged to their eyeballs in debt? They always have a hot stock tip for you, or tell you to get that second mortgage to pay for a cruise that you “so deserve.” If these people also happen to be close friends or family you may feel some added pressure to take their advice. It’s perfectly acceptable to thank them for their advice and then completely ignore it!
  • Don’t follow the crowd if the crowd isn’t headed in the direction you want to be moving. When I tell people that I will not have a car payment for the rest of my life they respond with, “What? Everyone has to have a car payment.” Oh really? Not if everyone saved their money and paid for a used car with cash. Accepting such societal norms are a sure-fire way to steer yourself into unnecessary debt.

Comments

  1. I’ve resisted spending $20 just this week by saying no to two lunch invites. It’s hard. I know another one is coming today, I don’t know if I will be able to say no!

  2. We are in the same boat…it’s uncanny.
    Every single one of your sources, particularly the one about in-laws, hit me right between the eyes.

    My FIL was (and still is) very very successful. I don’t think he ever made a bad move financially, ever. He was a middle manager for the phone company for 34 years, socked away money like crazy, but still lived an upper middle class lifestyle. Today he is probably one of the wealthiest people I actually know on a personal basis. He has always been my target, but I’m afraid I’ll never live up to his ideal.

  3. I find this post missing just one thing ;-) It’s not really keeping up with the Joneses anymore – now it’s Keeping up with the Hiltons and the Rockefellers – which as most of us (sane) frugal people realize – isn’t a real common sense approach to life. Why in the heck would we want all that debt and that big of a footprint on society – I certainly wouldn’t want my child growing up thinking that 15 credit cards and stealing from Peter to pay Paul to impress people or have more things is the way to happiness. Why do you think people want so MUCH stuff?

  4. The claustrophobic in my house thing really hit me.
    Everyone I know has a huge house, like 3000 square feet and up huge.
    We live in a nice, 2300 square foot home that we love, but whenever we visit friends or relatives, I begin to feel like my home is a cracker jack box. It can be hard to fight those feelings-everyone else has a huge house and even bigger mortgage, why don’t we?
    But, I soon get back to my senses and realize that we can afford what we have and what we have is pretty darn great.

    Great Post!

    Take Care

    LJ

  5. Dining out is our ‘new car’ We have many friends who are very into going to fancy restaurants for the good food and the good wine. We like these things too, and are really tempted, constantly.

    But since we started budgeting we’ve agreed to only eat out once a month (so we can say yes to our friends some of the time), invited friends over for gourmet home cooked meals, and finally, we order on a scaled down basis (only one glass of wine, no appetizers or desserts). So far this has been successful for our wallets and our self esteem.

    I wonder if there are other areas of our life that we are peer pressured into? Gonna talk this over with the hubby :)

    Also, CONGRATULATIONS on reaching 100 subscribers. And my #1, all time favorite posting of yours was the one on Abe Lincoln. I printed it out and saved it for inspiration. That post alone has kept me coming back and looking for more :) Thanks for writing!

  6. I find it interesting that so many people feel pressure to keep up with the Joneses, and make up for that inadequate feeling by spending. Isn’t the real, true goal to not have more stuff than everyone else, but more MONEY than everyone else? If you tie your self worth to your brokerage account instead of your possessions, a large weight gets lifted off your shoulders pretty fast. After a little while, you can go out for the day and quietly point out to yourself that you’re richer than this person, and that person, and that other person over there.

    I’m equally perplexed by people who buy new cars thinking it will impress others. Cars that actually impress cost a minimum of $80,000 (some would say higher); how on earth is a brand new $40,000 or $50,000 car going to make anyone spin their head around and look? Maybe I just don’t get it.

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