Dear New Frugal You,
I have a hard time managing my money. I have an active social life and I enjoy going out. Sometimes I feel the need to keep up with my friends' spending habits. Do you have any recommendations on ways that I can stop spending as much, but still continue to go out with my friends? -- Nathaniel from Portland, Ore.
Expensive friends: We've probably all known a few. We enjoy being with them, but they have a knack for spending more than we could or should, and they drag us along for fun, but expensive rides.
It sounds like you've come to the point where you recognize the need to make some changes. But what should those changes be? Let's see if we can't creat a strategy that will help you find the best answer to your problem.
The first thing to do is to see if your entertainment spending is more than it should be. Entertainment is typically about 5 to 6 percent of your budget.
According to the Bureau of Labor Statistics, the average American spent $2,605 on entertainment in 2012. In your case, entertainment is important, so you might spend a little more than average on it. That's not a problem as long as you spend a little less in some other area.
That leads us to a question: Are you willing to cut other expenses so that you have more money for going out? By driving an older car or living in a cheaper apartment you might keep your total spending in line. There's nothing wrong with that. It's simply a way of prioritizing your spending.
Assuming that's not possible, then you have some decisions to make.
You say that you feel the "need to keep up" with your friends. That sounds to me as if it's the key part of your problem, and you need to understand why that's important to you. Sometimes understanding why we do something makes it easier to change our behavior. If soul-searching doesn't get you there, it may be woth it to you to seek out a session with a trained counselor who can help you get to that point.
Once you get there, you'll need to either try to change some of your friends' activites or not be involved in all of them.
Try to steer your friends to less expensive outings. Instead of dinner out, would they be willing to just go out for coffee and dessert? If you're clubbing, don't go for the whole night. Be willing to stand up to the "party pooper" ribbing and limit the amount of time you'll be out.
Many "going out" experiences can be duplicated in less-expensive surroundings. For instance, friends that used to visit a new restraurant each week are now taking turns hosting small dinner parties.
You might want to try something new but similar to your current outings. If your group are regulars at happy hour, perhaps you could get them to take a bartending course. Of if they're interested in restraurants, how about a cooking class at the local night school?
Or replace your current outings with something entirely different. Some groups go out as an excuse to get together. If the camaraderie and not the activity is important, suggest that the group go do some volunteer activity together. You'll build some amazing shared memories.
Ultimately, if your friends aren't flexible, you may have to make a decision. It may turn out you can keep your friends or your credit rating, but not both. It will probably be a hard decision to make, so make your decision and choose your words carefully. But remember that those friends won't be able to help when you begin credit counseling or file for bankruptcy.
If you do decide to break some old ties, finding new frugal friends isn't that hard. There are a lot of us, and we're pretty friendly as a group. So strike up a conversation with someone that you've met at a thrift store or garage sale. Make friends with some of the people at your DIY class. Your new friends will share your desire to save money.
Nathaniel, you're wise to address the issue before it causes you too much financial trouble. Better to anticipate a problem and avoid it than to suffer unexpected consequences.