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.

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