Are you done with debt? I mean REALLY done with debt?
If so, this article is definitely for you. It's aimed at those who have made a pact with themselves that their debt is evil and loathsome and who are committed to eradicating it once and for all.
It’s specifically for you if you’re using something like our “8 Steps To Erase Debt” system to climb out of the debt hole you’ve dug for yourself and have vowed never to return to.
And, even if you haven’t gotten to this place yet, this content could still be eye opening for you.
Just know that it’s aimed at my audience most of whom have reached the point of no return and have determined to make debt their mortal enemy to be vanquished at all costs.
And obviously, there are likely more than 4 ways your friends may be keeping you broke, so please be encouraged to write all the ways I've left out in the comments section below.
The Joneses are now the (Bill) Gateses. How can anyone keep up with that? And why would you even try?
Keeping up with the Joneses is a very real phenomenon. We all know that.
But the real question is how do you begin to detach yourself from it once you’ve figured out that it’s just not working for you and instead causing you to dig a deeper financial hole every month?
We cover exactly what to do about it in our free resource, “8 Steps To Erase Debt”.
This particular article is meant to help you to start addressing some of the mental and psychological changes that will be required for you to stick to the plan, eliminate your debt and embrace a life of financial peace.
It’s tough, but believe me it’s worth it.
All that said, here are the 4 ways your friends may be keeping you broke:
“Hey, let’s go out to lunch/dinner/coffee, dessert."
Man, when you’re trying to adhere to a budget, this is straight kryptonite and you know it. It still can be for me, even though I’ve successfully sacked all my debt.
With our new financial coaching clients, food (both groceries and eating out) is usually the category that is 1) the most out of control and that is 2) simultaneously the biggest mystery.
It’s not uncommon to see $1000-$1500+ spent for a family of four on food.
It’s usually a fairly painful exercise to start to get the eating out part under control.
But, rather than quit “cold turkey” and risk divorce, just try to cut it in half the first month and shimmy up as you start to garner some success.
Don't hear me wrong. Vacations are a really good thing. I just want for them to fit well inside your income and budget.
Looking for a "break", while you’re getting out of debt? Well, spending money on a cruise or a Disney vacation that you “throw” on a credit card is no longer an option.
So, what do you do?
You just have to start learning to say, “no”, or “no for now, or even the dreaded, “I just can’t afford it (right now).
It's okay to say it because it’s true, at least for the time being. Once we’ve gotten you to solvency, there are ways that more spend vacations can be had. We’ll just have you save (i.e. create a vacation “sinking fund”) for it.
There are also TONS of free options like going to parks, going camping, having a picnic, visiting relative (that you actually like).
Hey, I know it’s not as sexy as spending a ton of money on a vacation, but we’re trying to get you out of debt here.
I know, I know. I love Audis, too. But does it fit inside budget? Even if so, do the carry costs?
Yes, car purchases. We’re crazy about cars in our culture.
And cars are the ultimate "throw the scent off the I’m actually broke” trail, meaning you can look like you’re rolling in money by driving a killer car, but your bank account is screaming silently in the background.
“I can drive a nice car for just a few hundred bucks a month”, is how the internal conversation commonly goes. The marketers at car companies and banks have roped us into the “affordable monthly payments” paradigm.
We train our students to jettison (get rid of) this monthly payments mentality and move them to thinking about things in more annual terms. Not easy at first, but a game changer!
The average car payment in America is over $500 per month and car loans are now available for over 5 years! I even hear rumblings of 7-9 year loans coming soon!
If you want to win with money, you HAVE to revisit this temptation to buy cars you can’t afford.
Even though I’ve been out of debt for 10+ years, I would NEVER even consider buying a brand new car. Nor would I ever consider buying a car I couldn’t pay for with cash (and with as little of that as possible).
Don't get me wrong, I'm not saying you shouldn't love your friends. Just ask the question, "can I actually afford all the stuff they invite me to do?"
These are what I call the "silent assassins of peer pressure". They’re the ones that put a subtle yet unrelenting pressure on you to conform.
They’re the hardest ones to work around, too. Precisely because they involve your friends, family and therefore your perceived reputation.
I recently had a client that was furious with herself about saying "yes" to being in a friend’s wedding.
Long story short, this “friend” had planned a bridal shower, 2 bachelorette parties (1 local/1 destination), a destination wedding ceremony and a traditional local ceremony.
Between, buying a gift, a dress, travel and hotel accommodations, this client wound up spending over $1000 for the “privilege” of being in this series of events.
And the craziest part of all was that she wasn’t even that close of friends this happy spender of her money. Crazy right?
Some "peer and social pressure"examples would include:
Electronics Purchases (the latest phone, video game console, drone, etc.)
Private School & Universities
Weddings - (particularly “destination" (i.e. Cancun, Bahamas) AND "multiple event” weddings)
Do you "get down" with Pinterest? If you think this post might be helpful, would you pint it to your favorite board?
Yes, there is another way and no, unfortunately it's not easy.
The determining factor in whether you choose this other way depends on your level of dissatisfaction or even disgust with your current financial situation.
This other way requires living well inside your means, eliminating debt, embracing frugality and living with an eye on what you want your financial life to look like it 5, 10 and even 20+ years from now.
It also requires jettisoning many of the culturally accepted norms like, "I'll always have a car payment", "I'll never pay off my student loans" or even "we'll always have SOME sort of debt".
Coming into this mindset will naturally require you to start recognizing and eliminating these types of statements from your vocabulary.
Now don't get me wrong, I'm not saying that the Joneses aren't fine people. Believe me, I know some Joneses and they're some of the best people around.
But the ones that, by their overly consumption-oriented lifestyles, elevate my discontentment, well... we'll just have to have to grow some distance so that I can stay within my means and budget.
Eliminating these culturally accepted norms is not easy. It literally requires you to become counter-cultural in all the right ways.
Heck, it may even cause some distance in some of your friendships. It certainly did in mine.
But, whatever the consequences, the level of sanity and overall peace that you will have in your life is really inexplicable and gloriously mysterious until you've started living within your means, eliminating your debt and proactively planning for your financial future.
So, if you're ready to make a change, get control of your finances, ditch debt and live with more financial freedom, let's talk about our free, 8 Steps To Erase Debt guide.
0. Stop All Retirement Investing (Until Step 4)2. Starter Emergency Fund of $10003. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)4. Full Emergency Fund of 3-6+ Months’ Expenses5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)6. College Funding (if applicable)7. Pay Off The Home Mortgage8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!