Posturing oneself into bankruptcy

I apologize for not writing any articles in quite a while; work, among other things, had to be prioritized.

I’ve been listening to Dave Ramsey’s YouTube channel; from what I gathered, he’s a personal finance adviser who helps people get out of debt. His recurring advice is to reduce spending, pay off all debt, pay all necessary things with cash and not credit, don’t finance depreciating assets like cars, basically all the standard common-sense stuff. However, what piqued my interest is that people seem to get into debt for similar reasons regardless of their income level – it’s not that they go into debt because they can’t make ends meet, they can’t make ends meet because they spend above their income level. To an outside observer this looks irrational, but I think I get it.

There seems to be strong peer pressure involved, real or imaginary, to send outward signals of being in a higher income bracket than you in fact are, because of both positive and negative expected social attention. The positive attention is “neighbors” assuming you’re doing well and feeling envy, which boosts your ego. The negative attention is inviting scrutiny and competition if you send signals at or below your actual income level. Essentially, it’s like a cat puffing up to appear bigger than it actually is, when facing a potentially threatening situation. If you appear bigger, others will think twice before confronting you. If you appear normal or smaller than you actually are, potentially dangerous challengers might feel encouraged to encroach upon your territory. In such a challenge, you might actually lose, but any challenge is fraught with inherent dangers and if you can avoid it altogether by posturing, the better.

The problem is, posturing might be causing you other problems and might prove to be even more expensive in the long run, so on one hand it’s more dangerous than it appears and is definitely not free, and on the other hand its benefits might be overstated. Sure, you may argue that having an expensive suit, watch and car can give you an advantage in the business world and might land you a deal you would have otherwise missed on, but it is my experience that those kinds of posturing almost never work, and if they appear to, it’s usually an illusion because you landed the deal because of your other merits, and due to low self-confidence you ascribed the result to your paraphernalia. Sure, people will check out your clothes, your watch, your car, your house and other things, both consciously and unconsciously, because that’s what people do, but your competence, knowledge and actual confidence will play a much bigger role than your trinkets. Sure, there are social circles where nothing but posturing matters, but it’s my experience that those are not where the actual money is being made. For each YouTube channel where the author makes videos about his Lamborghini, there’s another channel with more subs where the author simply talks in an interesting way.

So, I conclude that expensive trinkets primarily serve the purpose of alleviating one’s anxiety, insecurity and discomfort in an uncontrolled environment. The more threatened and weak you feel, the greater the need for investing in a protective outward pose. Sure, when you’re trying to make the best possible first impression, it’s useful to check all the expected boxes, basically if people expect you to be wealthy you are expected to drive an expensive car, and if you don’t, they’ll start questioning what’s wrong, and that’s never good. However, your idea of an expensive car might actually be much more expensive than what would suffice for checking the right boxes.  A several years old nice car will do just fine. A brand new car of the same class will not improve the impression. A brand new car from a lower class, that costs more than the older high-end car, will actually be likely to start the gossip. An expensive, but not super-expensive watch might start more questions than a Casio. If you wear a Casio, the assumption is that you don’t care about watches and nobody will give a second thought about it. However, a Frederique Constant will raise the question why you didn’t buy a Jaeger-LeCoultre or a Patek. Too much posturing raises red flags – what is this guy trying to hide? What kind of incompetence, weakness or bullshit is he hiding or trying to sell? I am always suspicious of perfect façade, and trust me, I’m not alone in that. If someone looks wealthier than Bill Gates, I am almost certain he’s some kind of a con artist. If I’m trying to hire a subcontractor for some job, it’s not the guy with the most expensive gadgets who’ll get the contract, but the guy who demonstrates the most straightforward competence in the subject matter. You do, however, need to check the right boxes, or people will instinctively assume there’s something not quite right. You need to dress appropriately for your job, you need to behave appropriately for your expected social role, you need to demonstrate that you generate expected levels of income and own property. The problem starts when people are insecure and assume they need more posturing than would actually do, and in doing so, they kill themselves financially.

Sure, it’s easy for the financial advisers to tell you not to buy a car you can’t really afford, but if you’re socially threatened, if you feel insecure, those fears are strong enough to make you sick or even kill you if you don’t deal with them in some manner, and for most people the most straightforward way requires the least amount of thinking – you just buy expensive shit and live a lifestyle above your income until you’re ruined, and then your self-confidence really collapses and it’s difficult to find your way out of that tunnel. The proper way out of the trap is to gradually build your confidence by realizing people hire and appreciate you for your skills, abilities and character, and not for the things you own. Then you can buy things because you like them, not because they are a shield you desperately cling to, fearing immediate attack on the first sign of weakness.

Don’t get me wrong: you do need to send social signals, and you occasionally do need a shield. Just be careful not to overestimate the amount of shielding you need, lest you spend your way into an early grave. For instance, the price difference between a brand new Mercedes E350 CDI and a two years old Mercedes E220 CDI is a factor of 2. There’s no difference in the strength of a social signal sent by either car in a business environment. There’s no difference in the strength of a social signal sent with a 5000 USD Rolex Explorer and a 20000 USD Jaeger-LeCoultre. They all check the same boxes. The main difference is, if you’re not sure of yourself and you overspend in order to increase your perceived shielding, you will end up bankrupt. Also, your insecurities will cost you dearly in other places, so you’d do well to sort yourself out first.