Is Peer Pressure Keeping You Poor?
Like every other Wise Bread writer, I hate debt. Although my debt doesn’t keep me awake at night, it is one of the things I think about while brushing my teeth every morning. “What will I do today (brush-brush) that will help me pay down (brush) my home mortgage ahead of (brush) schedule?”
The idea that “many people would rather struggle to pay off a large credit card bill than utter the phrase 'I can’t afford it,'” tests the limits of my financial imagination like a velociraptor tests an electric fence. It’s so painful, yet I can’t stop thinking about it. Spending money that you don’t have is a type of self-harm that often goes undetected and can have lifelong consequences. (See also: The Enemies of Frugality)
The Positive Power of "I Can't Afford That"
I am grateful that I figured out early on that people who judged me for saying “I can’t afford that” were the same people who were secretly living with crushing amounts of credit debt and didn’t own anything. I think most emotionally mature people realize that friends and family who make you feel bad about how much money you have are not nice people, but even armed with that knowledge, there is still so much peer pressure to spend.
One of the hardest things about not having financial parity with the people around you is turning down invitations to events that are out of your budget range. Being in debt can be isolating. In addition to missing out on weddings, nights on the town, or even schooling, friends who get turned down repeatedly might take your reluctance to spend money you don’t have as a personal rejection.
So, how do you talk about debt without losing all your friends? There must be at least a dozen ways that people manage their public spending vs. private debt, but I have four strategies that have worked for me personally.
Be Your Own Financial Cruise Director
Your debt is not your friends' problem to solve.
While your truly good friends will always listen to you complain about your financial woes, it’s not really up to them to make your life without money work. If you want to spend time with people you care about, suggest alternate, inexpensive ways of spending time with them:
- If you can’t afford to go to a $10 gym class, suggest a morning hike or a run through the park to your sporty friends.
- If you can’t afford dinner, ask to meet with your friends after dinner for a drink instead.
When I was really poor, I became the master social planner for everyone in my life because I would comb the weekly alternative newspaper for free concerts, book readings, art openings, and other events that I could invite my friends to.
Even if you live in a tiny town with no nightlife, there are plenty of free ways to spend time with your friends. For example, offer to go with them when they have to run all their boring errands. Or, hang out with them at school events for their kids. Do yourselves both a favor and schedule a cleaning day where you switch off helping each other clean your houses. Chores go faster when you have a friend to talk to.
First, be honest with yourself. Use a debt calculator to figure out how long it will take you to pay off your debt with what you are currently paying.
Once you’ve established your baseline, experiment with the calculator to see how fast you can pay down your debt if you just pay just 5% more than you are currently spending.
Once you know how little money it takes to cut YEARS off your debt, try to figure out what amount of money you can cut out of your budget and throw at your debt.
- Do you have good public transportation in your town? Would it be worth it to stop driving your car for a year if it meant you could pay down a credit card debt in the same amount of time?
- Would people at your office still be your friends if you stopped going on Starbucks runs with them every day and instead baked a homemade cake once a week to share with them in the lunch room? Would they still be your friends if you just escorted them to Starbucks and didn’t order anything yourself?
Second, be honest with your friends. Put on your adult pants and just be out about your budget parameters.
The economy is crappy, so most people are actually in the same boat. In addition to saving yourself from friendship-ending misunderstandings, being honest about your finances can actually lead to finding extra work. Most people do live lives of quiet desperation, and those people are not the ones who get recommended for jobs. I am very loud about my life of desperation, and consequently I’ve always had odd jobs come my way. No reasonable person can fault you for wanting to sock away more cash during a recession, and you might as well reap the rewards of talking about yourself.
Decide What You Really Want
Nothing is more depressing than not being able to afford something you really want because all your money is going to pay down credit debt. That said, if you earned an extra $100 per month this year that didn’t have to go for bills, what would you spend it on?
When I was still in college, I decided that I wanted to buy a house by the time I turned 30. Every time someone pressured me to spend money I didn’t have I would say, “I’m sorry, I can’t afford that because I’m saving up to buy a house.” That really shut people up because people can understand the desire and expense of homeownership. Also, by having that goal, it was so much easier to not feel deprived because I would just ask myself, “Do I want this cocktail, pair of shoes, theater ticket, whatever more than I want a house?”
So what do you really want? The kids in private school? A vacation? The ability to eat sushi three times a week? People are a helper species. If you commit to a personal goal, even random strangers will root for you to achieve it.
Find People Who Will Reinforce Good Spending Habits
Ultimately, how you spend money is your responsibility. Are the people who are pressuring you to spend money going to apply the same amount of attention to helping you get out of debt? If the answer is no, find some people who share your financial needs and desire to get out of debt.
A recent Harvard Business School field study tested the effects of self-help peer groups on micro-entrepreneurs in Chile. The paper’s authors discovered that participating in self-help style groups helped the micro-entrepreneurs almost double their savings.
The Harvard researchers also discovered that similar effects can be achieved by holding people accountable through feedback like text messaging. Luckily, you don’t have to be a Chilean micro-entrepreneur to get online feedback. ING’s CompareMe tool allows people to plug in their age, income, and hobbies and see how their retirement savings and their debt stack up.
Do you work better with a buddy? Most people do. If you can’t find a friend or family member who wants to commit to a savings challenge with you, recruit someone who lives near you. Likely candidates include anyone who attends a Dave Ramsey seminar or any adult education class on personal finances or Simple Living. Alternately, you could always start your own savings group online, where you can get advice and support from people who are actively looking to spend less and save more.
Do you feel peer pressure to spend money you don’t have? What do you think about it? What do you do about it?