Financial Peer Pressure, Stop The Influence!

By glblguy

I remember high school like it was yesterday. While I had many good times, overall high school wasn’t one of the more fun times in my life. I preferred college far more. One of the negative things I vividly recall about high school was peer pressure. I always felt like I had to have the best name brand clothes and shoes. I was always jealous of the rich kid’s new Mustangs, Corvettes and Camaros. Not to mention the pressure to have girlfriend.

I really believed that once I graduated from high school (and even college) that peer pressure would go away. I sure was wrong huh? Peer pressure is worse now as an adult than it ever was as a kid. Bigger homes, ceramic tile, greener lawns, new BMWs, exotic vacations, your neighbor got a big screen TV that’s 2 inches bigger than yours…the list goes on.

As much as I hate it, my friends, neighbors and co-workers impact my desires for stuff and ultimately my spending. I’m sure your friends do as well. Their interests and purchases tempt me, even thought I try to avoid it.

One thing that I’ve learned over the past year or so is that conquering peer pressure requires the same attribute that will allow you to control your finances, get out of debt and become wealthy…self discipline.

Sometimes you just have to say no

Have you ever been invited to go out to an expensive restaurant with your friends but you didn’t have the money in your budget or even have the money period? Of course you didn’t want to say no. I mean what would they think? They might think we’re poor or that we don’t like them, or they might even learn the truth, that you’re in debt up to your eye balls and trying to get control of our finances, *gasp*.

The truth is, if they are truly your friends, they won’t want you to go out and spend money you don’t have. Frankly, maybe they shouldn’t be going out either and you saying no may just keep them from overspending. Trust me, most likely you aren’t the only one that can’t afford it.

Don’t allow social pressure to control your finances. Just be honest and tell them you’re on a budget and can’t go, but maybe next month and allocate it in your budget.

Oh, your house is only 1500 square feet?

Have you heard something like this? We sure have. Our neighbors love to compare homes. The size, style, new appliances, types of floors, new wall paper, paint…the list goes on. What makes matters worse is there seems to be this train of thought that says making improvements to your home increases the value. While this is true, it seldom ever increases it by more than you spent.

How about some of the neighbors that are moving out and into that fancy new neighborhood where the homes are 1000 square foot larger and cost twice as much? We’ve had this happen too. We’re still in the same home. Don’t move just because everyone else is, and don’t get caught in the trap of wanting more house than you really need. A fancy big house doesn’t make a home.

I feel bad for all of the people facing foreclosure now due to the sub-prime lending crisis and the overall decline in housing. These people wanted to purchase a house thinking it would make their lives better, provide them with a home. In the end, what it has caused them is financial crisis.

You don’t have a credit card???

People are shocked and even laugh when I tell them I don’t have a credit card. They can’t believe it. We tend to live for the present and not think about the future. We want things now not thinking of the longer term consequences. Credit cards are the primary enabler of this line of thinking. Want that new hot tub and can’t afford to pay cash, just put it on a credit card. Forget the fact that you’ll pay $2000 – $3000 more for it in the long run. Forget the fact that you might loose your job and not be able to pay for it at all.

For me they just aren’t worth the hassle, so I chose to not have one. Laugh all you want.

What do you mean you can’t come?

Your friend from college calls and is getting married for the third time and invites you to attend. He lives a long ways away and its going to cost more money than you have. Your buddies are going hunting up the mountains for the week and you’re invited. The problem is you and your spouse agreed two weeks ago to start a budget and begin working the debt snowball to pay off your debt. Not to mention you don’t have the cash.

In both of these situations, what do you do? Society would tell you to use your credit card and pay on that vacation or trip for months and maybe years after you get back.

Don’t get me wrong, I’m all for get aways, visiting friends and family, and vacations. But if you can’t pay cash for it, don’t go. I am sure I’m still paying for vacations from 2 maybe even 3 years ago. Sure turned out to be expensive trips…

Instead of flying out to the wedding, send a nice gift. Tell your friend you just don’t have the money and that you’d love to be there but just can’t. The hunting buddies? Well, be a man. Just tell them you made an agreement with you wife and you intend to stick to it. That’s what real men do.

Misery Loves Company

How many times have you heard this statement? Maybe that friend or family member who is trying to pressure you into buying that new boat or camper is just trying to make themselves feel better about the debt they are in. Sure, they’ll act like they can afford it…I mean they have it already right?

Debt makes it easy for people to look as if they can afford things they can’t. As I write this, a fellow football parent is parked next to me in a brand new and expensive car (yes, I blog while sitting in my car during my son’s football practice). I know what they do for living and I know there is no way he can afford it. I’m guessing he doesn’t know that yet.

Reading through some recent statistics on car purchases, I found that less than 20% of car loans are 12 – 48 months. Some now even go as long as 9 years, and 7 years is becoming common practice! Even worse, 25% of car buyers roll negative equity from previous loans into the new loan. In layman’s terms, they are starting out owing more on the car than it’s worth before they even drive it off the lot.

By a used car and pay cash for it. By buying used, you let someone else take the depreciation hit. By paying cash you are avoiding the fatal financial mistake of getting a loan on a depreciating asset.

How do you avoid these problems?

Avoid those friends, co-workers or family members that pressure you to buy. Don’t visit the boat store with them. The next time your shopping friend calls and wants to head to the mall, politely decline.

Will you loose some friends? Maybe, but the bottom line is that personal finance is often about making hard choices. As Dave Ramsey is famous for saying “Live like no one else so you can live like no one else”. Oh, and if you lose some friends over decisions like this, they probably weren’t good friends anyway.

How has peer pressure effected your finances? Do your friends, family, or neighbors pressure you? Share your insights by commenting below.

27 Responses (including trackbacks) to “Financial Peer Pressure, Stop The Influence!”

  1. plonkee Says:

    I am subject to a small amount of peer pressure to go out for drinks and so on. I know that I will succumb so I just build a very generous going out pot into the budget. Pretty much everything else I can make myself resist.

  2. glblguy Says:

    I get that too, but I have a good excuse…6 kids to get home to :-)

  3. PFJournal Says:

    It’s a real problem in this society and it’s not getting any better. The easy credit we saw these last few years only fueled this compulsion and we’re finally starting to see that subside.
    Fortunately, I’m known as the cheap one in my circle of friends and family. I just get to shrug my shoulders and go, “Ah, you know me, Mr. Cheap.” Gets me off the hook every time.

  4. Pinyo Says:

    Ha ha…there are some friends that cause me to cringe every time they said “let’s go out”. I can count on spending too much money with them.

  5. paidtwice Says:

    Ahh this post reminded me of how much I (did not) love high school…. :)

  6. Lynnae @ Being Frugal Says:

    It’s amazing how peer pressure just keeps following you. It’s nice to have online friends who understand the need to manage money well. :)

  7. glblguy Says:

    @PFJournal – Mr Cheap I love that.

    @Pinyo – same here, that’s why I don’t out with them…most of them are single :-)

    @Lynnae – I agree on both accounts

  8. Melissa Says:

    This has been an issue for me because I hate to disappoint my friends and family by saying “no”. It can be hard to get them to understand why I can’t go out for drinks more often, especially when they aren’t on a budget themselves. Great post!

  9. justin Says:

    It’s easy, don’t be in debt and you can afford it. ;)

    Most places you go out to eat you can find under $10 meals. Don’t order a drink, drink water.

    Am I really odd, with only one or two of my friends actually carrying non-mortgage debt?

  10. glblguy Says:

    @justin, well you can, but should you? Where do the draw the line? I know people that aren’t in debt, and frankly have alot of money saved and still spend more than they want to by succumbing to peer pressure.

    Under $10 IF you’re single, I can’t eat at McDonalds with all of my kids for $20.

    I think you probably are odd, most people carry debt, just do a little googling on debt statistics.

  11. Justin Says:

    Should you? Now that’s the question. None of our circle (mid-30s to early 40s) have kids, though one couple recently became pregnant. We get together and go out to eat maybe twice a month as a group. The bills for the whole table rarely go over $100. We get together with one friend in particular about once a week. That bill is usually about $50 for three people.

    Should we do it? It’s a time to catch up, shoot the crap and enjoy each others company. What’s the use of money if you don’t enjoy it.

  12. glblguy Says:

    Justin, I agree 100%. My focus was mainly on people that are struggling or overspending. If you are saving what you should be to meet your financial goals, living within your means and don’t have any “bad” debt like credit cards, than you should enjoy your money.

    Heck, I’m in debt and still spend money to enjoy life a little and wrote about it after we visited our local fair.

    What’s life if you spend all of your time in your home saving and hording money when you should should be enjoying the short time we have here. I think you just have to find that balance. Interesting we’re having a discussion on this topic, as I actually wrote an article last night on a similar topic I plan to post next week (yep, shameless teaser).

  13. Justin Says:

    I think you just have to find that balance.
    Exactly. I am glad you are writing an article on the enjoyment of money as well. A lot of the financial blogs I have been reading are militant in the “save every penny you possibly can” camp, and it’s extremely disheartening.

  14. Annie Walker Says:

    I’ve found a great way around the peer pressure is to be the first to suggest an outing, and to suggest a more frugal option – a picnic, a walk etc. People rarely say, “No, let’s do this more expensive option!”.

    We’re also working on setting up some recurring cheap evenings – friends of ours run a dance club which costs pennies to attend (because they’re broke, too!), and we’re trying to set up a music session/open mic which will be really cheap to attend too…

    When you’re the trendsetter/organiser, people are usually happy to go with the cheaper option!

  15. glblguy Says:

    Annie, really good suggestion. Great that you have friends that are into cheaper and frugal options.

  16. dan Says:

    soo true .sooo true! i think it gets worse as we get older. just gotta be happy and content with what you have and that all these “things”(material) keep puting us deeper and deeper into aint worth it!!!!

  17. glblguy Says:

    Thanks for the comment Dan, you are so right, it just isn’t worth it!

  18. Steve Says:

    You’ll hurt your financial future if you don’t spend time with people who have high earning power. Consider it an investment. Just make sure you separate the real big spenders from the phonies.

    Peer pressure to have a girlfriend? O.o

  19. glblguy Says:

    @Steve – Not sure if I understand what you mean. re: peer pressure for a girlfriend…yes, if you didn’t you weren’t “cool”. Maybe it was just me or my school *shrug*