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Peer pressure can be a very strong influence in decisions of all kinds. The need to fit in becomes a strong influence on our actions. If we are surrounded by others who are richer than we are, we may feel the need to upgrade our clothes, our cars, and our entertainment choices to match theirs. This upgrading requires money which can become a problem if you're trying to compete with another student whose dad is the CEO of a Fortune 500 company.
Ultimately, self-esteem comes from believing in yourself for the person that you are and not for what you wear. Unfortunately, this is easier said than done. College is a melting pot of students from all backgrounds. For the first time, you may find yourself in contact with others who come from a different economic background than you do. Try to remember that some students have more resources than others and that it is an expensive undertaking to try and keep up with those who are in another financial league.
George was not qualified to enter the big leagues, but he wanted to join the team all the same. George was attending the University of Southern California, a university with a tuition of around $20,000 a year. His parents, although not wealthy, had managed to save $40,000 for his education. This amount combined with his student loans should have carried him through his four years. A rational calculation of his necessary budget didn't take into consideration the peer pressure George would encounter.
George grew up in rural Kansas. He was the high school valedictorian and football quarterback. These factors helped him to get accepted to numerous schools. George decided on USC because he had never seen the ocean and the excitement of Los Angeles was in stark contrast to his predictable hometown.
Upon arriving, George immediately felt like he didn't fit in. The majority of the other students came from wealthy families, and George found he didn't have the financial spending means available to him that they took for granted. In order to subsidize his activities as one of the crowd, George was able to tell himself that his credit card usage was all right since he wasn't accumulating a balance.
After George got comfortable with using his credit cards, he started to carry a small balance. Over time, this small balance started becoming bigger as his available funds weren't able to cover what was owed each month. To rationalize this running balance, Goerge changed his view of debt as a "bad" thing to something acceptable since it was college debt and that was "good" debt. Wasn't it a fact that everyone had to take on debt to go to college? Wasn't everyone expected to have student loans? Besides, all his peers believed that the great jobs they would be getting after graduation would enable them to pay off their credit card debts.
Now George is a recent college graduate. He is earning an entry-level wage at a large corporation. Although he began with a starting salary of $60,000, George's paycheck is only large enough to pay his rent, car payment, student loans, and credit cards. George continues to rely on his credit cards to pay for gas, groceries, or anything else he wants to buy. Forget savings! He lives in a very small studio apartment in a dangerous part of town since that is all he can afford. The sad thing is that George will be looking forward to making his student loan payments for the next ten years. That's a short time compared to twenty-three years for his credit card payments if he continues to pay at his current rate.
Peer pressure is a hard thing to ignore. It takes a high level of self-esteem to resist conforming to the "crowd." If George wouldn't have felt the pressure to keep up financially with his wealthier classmates, he probably wouldn't have accumulated so much debt. In retrospect, George now realizes he had a choice to live a frivolous and lavish lifestyle during college and the life of a pauper afterwards or live the life of a starving student while in school (more acceptable) and a comfortable life after graduation. He now wishes he had made the later choice.
Copyright 2001, Dara Duguay - Excerpt from the book Please Send Money - A financial survival guide for young adults on their own
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