Debt and the Company You Keep

You have heard “your only as good as the company you keep” or “Birds of a feather flock together, “A smart man surrounds himself with smart people”, “If you hang around with trash, you will be seen as trash.”

These sayings are usually a different way of saying you are judged by your friends or those you hang around with.  Many times, especially to children or young adults we say these sayings to insure they pick the right friends.  Let’s face it, if our kids are hanging around known drug dealers chances are others will assume your kid is either doing drugs or dealing drugs, true or not, guilt by association.

So how does this all relate to you and the debt you have?  Actually in two ways.

Keep Up With The Joneses

If you are in debt and you are hanging around others who are in debt, you will most likely stay in debt.  You aren’t associating with people who will be building you up.  Chances are, both you and them are making purchases to “keep up with the Joneses.”  Let me give an example.

You’re good friends, we will call them Linda and Bob Jones (fictitious names, I don’t know anybody by those names.)  Linda and Bob invite you over for dinner and to show you their new 52 inch wall mounted TV.  They share with you all the bells and whistles, it is real cool and you both really like it.

On the way home you start discussing how nice it would be to have a TV like that.  That way you could invite Linda and Bob over alone with several other couples to watch the big game.

What you didn’t know, or even consider, is that Linda and Bob put that TV on a “90-day same as cash” electronics store card.  Since they are already maxed out on their other cards as well as have a home equity line of credit, they don’t have enough funds to pay that balance off in 90-days.  After the 90-days the interest charges kick in and since this is a store card interest isn’t cheap, around 26%.  To you from the outside it looks like the Joneses are doing great financially.

Most likely to them, it looks like you are doing great as well, but your not, just like they are  not.  Both you and them are in debt, and as long as you keep hiding your financial situation you will continue to be in debt.

This could change.  Sometimes during the debt elimination process some very difficult decisions need to be made.  You may need to change the company you keep.  I’m not saying you have to kick Linda and Bob to the curb, but if associating with them means you have to keep up the standard of living they are living then until you can accept that you can’t keep up with them financially you may need to decline some of their invitations.

If they are very good friends you could share with then that you are in debt and trying to break free, that you are trying to pay off your debt, and live on a cash basis.  You might be surprised, they may be relieved and support you, they may even admit their situation and ask if you can be accountability partners for each other.

On the other hand, they may be embarrassed for you, unable to admit they are in the same situation and keep you at an arms length, either way, both scenarios are good for you.  It will hurt if they choose the latter, but keep in mind, you both are making new friends through your new financial peace class as well as online communities.

Financial Peace University

A fantastic self help is Financial Peace University.  This is a fantastic book that will teach you how to budget, save get out of debt and even invest. I highly recommend it if you want to be successful with money.

Another good option is to join a Financial Peace University class. Part of becoming debt free is directly related to the company you keep.  It is also just as hard to change your company and friends as it is changing your spending habits.  That is way a support network is so very important.

Start Today

Start today, set a goal to find a good accountability partner or support network that will support you on your journey to become debt free.  Hint…this site is a great place to start.