Your friends and family influence you. They affect the way you view life. If your friends are frugal, it’s easier to be frugal yourself. But if they’re wrapped up in consumerism and materialism, and can be difficult to resist the urge to join them. It’s only natural to want to fit in.

Rob wrote yesterday to ask how to handle a situation where he wants to lead a simple life, but those around him aren’t supportive. How can he cope with peer pressure? Here’s his story:

Since we try to live frugally, we don’t have a television or video games or any other electronic toys in our house. We try to spend time as a family, talk to each other, read books, try to help my wife in cooking etc.

My colleagues at work tell me that I live a miserable life, and I don’t give my family “materialistic life pleasures”. Those sort of words hurt me a lot. We don’t have a TV at our house and my colleague makes fun of this thing all the time.

How should I respond to people like this? Should I even pay attention to them? I don’t want to spoil my relationships at work. I’ll bet a lot of your readers experience the same thing. What are your thoughts?

It can be tough when you’re trying to save, trying to focus on the simple things, and everyone else around you seems to value Stuff. But materialism doesn’t lead to happiness. Though having money might increase your happiness, wanting money (and things it can buy) almost certainly will not. “Indeed, not only does materialism not bring happiness,” writes Sonja Lyubormirsky in The How of Happiness, “but it’s been shown to be strong predictor of unhappiness.”

Rob needs to ask himself some questions: “Am I happy? Is my family happy?” If he can answer yes to both of these, then what does he care what other people think? If he continues to struggle, he should remind himself of a few ways to cope with peer pressure:

• Trust your instincts. If you’re sure of your choices and the reasoning behind them, say so. When you get pressure, explain that you’re happy just the way you are. Be confident. Be proud to be a non-conformist.
• Laugh it off. When your friends and family get on your case, make a joke and move on. Don’t let their opinions rattle you.
• Find other friends. This isn’t always possible (or desirable). Rob may be stuck with his co-workers eight hours a day. But if your friends are pressuring you into a lifestyle you don’t want, hang out with other friends. True friends support each other; they don’t tear each other down.

To live happily as a non-conformist in a world filled with peer pressure, you have to learn to ignore everybody. Do what you believe is right, and to hell with what other people think.

To me, Rob’s life doesn’t sound miserable. It sounds idyllic. It’s the sort of thing Kris and I aspire to: spending time together, talking and reading. I’m proud of what he’s doing.

Do you have financial trolls in your life? How do you handle them? How do you cope with peer pressure?

This post is from GRS staff writer Adam Baker. Baker, along with his wife and 20-month old daughter, will be spending the next couple of months exploring Thailand as they continue their recent backpacking journey.

Since the start of the economic slump started in 2008, the U.S. government has issued several incentive programs in an attempt to stimulate some positive movement in the economy.

First, came the popular $7500 tax credit for first time home buyers, which was to be paid back in $500 increments starting with the 2010 tax year. Next, they extended the homebuyer tax credit further into 2009, increasing the limit to $8000 and removed the burden of having to pay it back over time.

This past summer brought the controversial Cash for Clunkers program, which then spawned “Cash for Appliances.“ Most recently, the first-time home buyer tax credit has been extended, yet again, into 2010, and expanded to include some who hadn’t previously qualified since they weren’t officially first time homebuyers.

These incentive programs have drawn everything from wild praise to heated protests.

Did Cash for Clunkers bring success or regret?
Recently, the first few months of data has begun to come in from the now-closed Cash for Clunkers program.  The homepage of the official Department of Transportation website for the program, CARS.gov, now reads:

The enormously successful CARS program helped consumers who turned in gas guzzlers buy nearly 700,000 more fuel efficient vehicles in fewer than 30 days. By late September the U.S. Department of Transportation paid all eligible and complete dealer transactions. “There can be no doubt that this program drummed up more business, for more people, in more places at a time when our economy needed help the most,” said Transportation Secretary Ray LaHood.

But, not everyone is buying into the “enormously successful” label. A September article published by AOL Autos brings up some interesting facts about the CARS program:

• An August survey concludes that 17% of Cash for Clunker participates indicate they feel buyer’s remorse over their purchases. This is nearly double the traditional rate of 6-8%.
• While the average MPG of the vehicles in the program rose from 16.3 mpg to 24.8 mpg (a clear success), it’s estimated that individuals will be driving even more due to possessing a newer car. This could actually result in more fuel consumption overall.
• The program takes from over 300+ million taxpayers and rewards only a small group of 700,000.

And AOL Autos isn’t alone in the criticism of the program.  Just a few weeks ago, Edmunds.com issued a press release stating that taxpayers actually ended up paying $24,000 per vehicle sold through the program.

If Edmunds’ reasoning seems a little too simplistic (I’ll admit it does for me), there’s a more-detailed study by University of Delaware, which concludes that the cost of the program exceeded the benefits by approximately $2000 per vehicle.

Studies, press releases, and government websites aside, I’m worried that these programs encourage people to buy larger ticket items during a time that may be very hazardous to their individual financial health.

The last thing most people need to be doing in a down economy is adding thousands of dollars in new consumer debt. And in the CARS example, the majority of this debt will be on a consistently depreciating asset!

The program is best suited for a financially responsible individual, who was already in the market for an upgraded automobile purchase. But it’s obvious that the majority of the transactions didn’t involve this type of situation. For that reason alone, I have a hard time considering the program a success.

If you think impulsively buying a car is a mistake…try a house!
I have my doubts about the effectiveness of the first-time homebuyer credit, as well.

Over the last three years, I participated in the real estate markets as an agent, property management, and investor. Unfortunately, most of my participation centered around the foreclosure and short-sale markets. I saw hundreds (if not thousands) of individual cases as the housing market went sour. Behind nearly every one of these foreclosures and short sales was a rushed and impulsive purchase several years before. There were only a couple exceptions.

Once again, this tax credit is perfect for those financially responsible individuals and families who are already in the market for a conservative home purchase. I just can’t envision that this is the case for the majority of the claimed credits.

Last year, many of my friends in their 20s and 30s scrambled to take advantage of the original $7,500 credit/loan. A few rearranged their plans or bought a little early to ensure they capitalized on the incentive. Months later, they watched as it was extended to $8,000 and changed to not have to be repaid over 15 years. The same people who were considered savvy for rushing to catch this opportunity, now had wished they had delayed it another six months.

That’s just the point. No one knows what our government or administration is going to do in the future. As a whole, we seem to be letting these programs be a leading factor in our decision instead of just a bonus. I don’t know many people who, looking back five years after a home purchase, would say to themselves, “That would have been a great purchase had we only gotten $8,000 up front.”

$8,000 is a lot of money — I’d love to have an extra eight grand right now — but a home purchase is one of the largest financial commitments you’ll ever make. Rushing into such a huge commitment can end up costing you exponentially more.

It’s about more than just the numbers…
Major financial purchases, including automobiles and houses, are about more than just the numbers.

Of course, we want to take all numerical benefits and costs into consideration. We shouldn’t ignore access to these government incentive programs, but letting them be the leading factor in our decision making process would be a huge mistake.

In your financial life, make sure you are the one calling the shots, not Uncle Sam. And if the timing is right for you…don’t leave any money on the table.  Milk him for everything he’s got!

Work on Your Money: The Missing Manual continues apace. I’ve finished the first seven chapters (happiness, goals, budgets, debt, frugality, income, and banking) and have just begun on chapter eight, which is about credit.

As part of this chapter, I’d love to profile a GRS reader who gets by on minimal credit. Specifically, I’m looking for somebody who doesn’t use credit cards at all, and who can talk about the implications. What are the advantages? What are the drawbacks? Do you know how it’s affected your credit score?

I know I could interview my friend NCN from No Credit Needed, but he’s already in the budgeting chapter! So, if your a “no credit” sort of person (as I used to be) and are willing to let me interview you, drop me a line.

Speaking of NCN, he’s the first stop in this week’s link round-up. Last month, he posted a story of how a silly little experiment helped him get out of debt. He once used online billpay to send a credit card company $5 every day for a month. By doing this, he taught himself that he really could afford saving $5 a day — and he saw the power of the “debt snowflake“.

Jonathan Fields says, “Daddies, don’t let your babies grow up to be strangers.” Getting caught up in making more money so you can provide “nice things” for your family may actually lead you away from what they need most of all: You. This is great advice for all mothers and fathers. Remember that it’s your relationships that matter most, not the soccer, the schools, and the Stuff.

Last week, when I posted the little story about my conversation with a bank teller last week, I never expected it to attract so much attention. “Is there a generation gap in saving?” I wondered aloud. Here are some responses from around the web:

• The Simple Dollar: Is saving for old people?
• Studenomics: Are twenty-somethings not saving money?
• Debt-Proof Living: Why the “younger generation” is more responsible than you think

For the record, I’m not saying there is a generation gap (and, in fact, in the comments Jim shared stats that show saving is about the same for all age groups except the elderly). I was just recounting a conversation!

Here are some more quick hits (man, I’m loaded with links today!):

• Wise Bread: What it really costs to own a home
• Realm of Prosperity: How I was able to build good credit as a college student
• The Oblivious Investor: How much does a financial advisor cost?
• BudgetPulse: The best ways to teach kids about money

One last thing before the carnival summary — I busted a gut looking at Cats4Gold:

Here’s the weekly summary of financial carnivals. These are great places to pick up new tips on saving money:

• Tom at the Canadian Finance Blog hosted Carnival of Personal Finance #230.
• Gather Little by Little shared this week’s Carnival of Money Stories.
• The Festival of Frugality #203 was held over at Domestic Cents.
• Foreigner’s Finances rounded up the Carnival of Twenty-Something Finances.
• The Skilled Investor hosted the Carnival of Financial Planning #114

Final note: The category archives have a new layout. There used to be just 5-10 posts per page (with excerpts), but I found those tedious to wade through when searching for an old article. Now each archive page has a huge list of the posts in that category. For example, here’s the list from the self-improvement category (which is one of my favorites). What do you think? (Or does anyone besides me even use the category archives?)

To take control of your spending, you must first be aware of your spending. This mindfulness can be difficult for many people to achieve. GRS reader (and awesome artist) Tsilli pointed me to the work of Kate Bingaman-Burt, who has a unique way of being mindful of the money she spends: She draws it.

Bingaman-Burt teaches graphic design at Portland State University, but for the past eight years, she’s also been documenting her spending habits at her blog, Obsessive Consumption. But this isn’t just a spending log — it’s art! Here’s an example:

Would drawing my Burgerville milkshake make me more conscious of my spending habits? I’m not sure. But I do think that were I still in debt, drawing my credit-card statements would make me more mindful. Bingaman-Burt does that too:

I’m not suggesting that you should start drawing what you buy, but I do think that anything you can do to increase your mindfulness is great. It’s when we spend without thinking that we get into trouble.

You can see more of Bingaman-Burt’s work at Obsessive Consumption or on Flickr.

This is a guest post from Robert Brokamp of The Motley Fool. Robert is a Certified Financial Planner and the advisor for The Motley Fool’s Rule Your Retirement service. He contributes one new article to Get Rich Slowly every two weeks. Today at 3pm Eastern, Robert will by leading a live discussion about money and relationships at BlogTalkRadio.

Howdy, folks. I’m writing you from a hotel room in Charlottesville, Virginia. All alone. My wife kicked me out of the house.

But it’s a good thing.

You see, for reasons too boring to enumerate, it’s been a topsy-turvy few months in the Brokamp household, and my “to do” pile has really piled up. It was beginning to affect stress level, and threatening my remaining hair follicles (which are already an endangered species). So my wife found a hotel for me, reserved it for two nights, and kicked me and my “to do” pile out of the house.

And it’s been great. I’ve filled every garbage pail in the room, along with a trash bag I brought along with me. I’ve consolidated my lists, organized papers into folders, prioritized my various responsibilities, and fine-tuned my task-management system — all without the interruptions of kids, household chores, or the Wii.

My weekend away was all about my job, but if you’re having trouble tackling all those nagging financial tasks, perhaps it’s time you take a “personal finance retreat.” And you don’t have to go away; you just have to stay home on a day (or two) when no one else will bother you.

One of my colleagues recently did this. Motley Fool senior editor Denise Coursey took a one-week “stay-cation” to conquer her list of tasks. On the financial side, she changed her family cell-phone plan, opened a new bank account, set up direct deposit and auto bill pay, signed up with Mint, and created a budget. Besides streamlining her money management, Denise estimates that her financial retreat will save her $1,000 to $2,000.

In July, New York Times columnist Ron Lieber wrote about his own “financial health day,” which involved getting a will, opening a higher-yielding savings account at SmartyPig, and submitting flexible-spending receipts. He figures his day off will save his family $2,000, and he plans to make it an annual tradition.

Crossing off the items on your financial to-do list might require more vim and vigor than you have at the end of the day. Plus, many tasks require getting a human being on the phone, which is not always easy at 10 p.m. So maybe you, too, can increase your net worth and decrease your stress level by taking a financial health day. Here are eight tips for what to do, and how to do it.

1. Build Your Financial Control Center
One of the biggest impediments to completing any task is not having everything you need when you need it. Somewhere in your home, assemble your financial control center — a working area that has all the files, forms, statements, and passwords you need to get the job done. According to productivity guru David Allen (author of Getting Things Done), “The workspace should function like a cockpit — all the controls easily accessible as required, allowing for maximum focus on the work at hand.” And don’t forget the important tools: Before the big day(s), get thee to an office supply store to stock up on pens, printer paper and cartridges, stamps, sticky notes, folders, envelopes, tape, legal pads, and reference materials. Eliminate the speed bumps of having to get out of your seat or run to the store to get what you need.

2. Build That Budget
If you’ve always thought you should analyze your past spending and plan your future spending (i.e., budget) but never had the time, here’s your chance. Fire up that spreadsheet, or give personal finance software like Quicken or Mint for a spin.

3. Get All That You’re Due
Do you need to submit flexible-spending receipts, insurance claims, expense reports, or (gasp!) tax returns?

4. Prevent Future Expenses
Avoid penalties by renewing soon-to-expire licenses and registrations, sending in upcoming insurance premiums, and paying parking tickets or any other expenses that will cost even more if you procrastinate.

5. Take Time to Comparison Shop
Do you know which of your local grocery stores has the best prices? Are you paying too much for your cell phone? Could you get a better deal on your gym membership? Are you getting the most perks on your credit card?

6. Prioritize Your List
Financial housekeeping often takes longer than you think it will. So spend some time the night before ordering these tasks…moving those with the biggest financial payoff to the top of your list. Also, prioritize projects that can only be accomplished during normal business hours.

7. Be Ready to Multitask
You may be spending a lot of time on hold, navigating customer-service phone trees and waiting to be recorded for quality-assurance purposes. Have another task ready to work on while you’re waiting to speak with a human being.

8. Put On Your Blinders
This day is for financial housekeeping only. Turn off the cell phone, ignore Facebook, and don’t check your email.

9. Get Away From It All
Make your financial health day a real retreat by doing it somewhere else. Go to a hotel, bed and breakfast, a friend’s vacation home — somewhere with no distractions. Bring all the paperwork you’ll need. This is especially good for higher-order tasks, such as mapping out financial and career goals.

p.s. There’s still time (but not much) to fight pediatric cancer and make fun of my mustache.

J.D.’s note: I’ve been preaching the virtues of scheduling a Money Day for three years now! I think this is an excellent way to make time to tackle those financial chores you’ve been neglecting.

This morning, April wrote about trying to figure out how much house you need. In the comments, Tyler K. shared a photo of the house he and his wife live in. It has 450 square feet:

“Last year our joint gross income was about $170,000,” Tyler wrote, “but we still find this house plenty adequate, and it means our housing costs are proportionally half of the 30-35% of income that people generally recommend.”

I was intrigued (as were other readers), so I wrote to ask for more info. Here’s what Tyler has to say:

When we moved to Santa Cruz, we found this little tiny house one block from the beach. We loved it. We decided to take it as soon as we saw it. This house is a rental, but that’s something we’re okay with for now.

The big draws of Santa Cruz over Alameda were the beach (I surf and sail), the mountains and natural beauty (there are great parks, open spaces and roads for cycling), the weather (it’s sunny and 60 degrees out right now, which is typical for mid-November), my family, opportunities for my wife (she’s recently been participating in research on seals and sea otters). None of these things require a big house.

• I can ride my bike to go surfing, or go the other direction and be riding through the redwoods in the mountains in less than half an hour.
• We don’t have a TV room, but we don’t have a TV, so no need. We don’t have a guest room, but we don’t have guests but once or twice a month.
• We don’t have a “hobby room”, but my wife can knit on the couch, and it’s really sort of hard for me to surf, cycle, or sail indoors.

The house is small, but it’s not a compromise to live in. I love living here.

We’ll probably have kids in the next few years, and not too long after that, we’ll probably want a two-bedroom place, but it will still be small. That may be when we decide to stop renting and buy our own place, as well.

Obviously, Tyler’s house wouldn’t work for everyone. But I think it’s great that he and his wife made a conscious decision to live someplace smaller so they could focus on the things that really matter to them. This, my friends, is one of the keys to happiness (and financial success).

On a side-note, Tyler recently completed a fascinating 30-day-project:

Most of our lives are lived on average days, not big once-in-a-lifetime days when we get married, or pay off the house, or graduate from college. Yet, many people focus quite intently on these big goals, to the exclusion of day-to-day life. This is my effort to emphasize the days that make up 99% of our lives. For 30 days, I’m recording the regular things that I do, every day.

He spent a month photographing the little things that making everyday life worth living, from birds to biking to bugs. This being in the present moment is another of the things that can lead to happiness.

Thanks, Tyler, for sharing your story with GRS readers!