Hi PF, I hope this fits, but I just wanted to write you my cautionary tale on lifestyle inflation, and how easy it happens.
I think that a lot of people believe that it happens from buying that new Mercedes, or that nice house that you don't really need. For us, that isn't the case. Our car payments and mortgage are barely significant to this. It's the small decisions that you make every single day that add up.
When we started living together (college students) we made under 50k per year combined income. We had 1 car, we rented a cheap place, we cooked dinners at home, going out usually meant visiting a friend or having people over. We still had money for date nights, and didn't want for anything. Our credit cards were paid in full every month and we even had investments that we contributed to each paycheque.
In 2 years our combined income went from <50k to 225k. We bought a home well within our means. We purchased a new vehicle that was well within our means. There are no "big" purchases that have affected us.
It's the small daily decisions that we have been making for the past 2 years that have affected us. It's the decision to buy breakfast every morning instead of eating at home. It's the decision to buy lunch at work instead of packing one. It's decision to go out for dinner, or order in instead of going to Safeway and making dinner ourselves. It's the decision to say yes to every event, and every friend that wanted to go out. When you get into this new income level you make new work friends who make what you make (or more), and they go out all the time. They invite you for a vacation that you think you can afford and you join them. And it's so easy to say yes when you can afford it without going into debt, or putting it on the Visa.
What's worse is that when you do go out, you decide to buy the premium whiskey instead of the well whiskey at an extra $8 per drink. $8 is nothing right? It's the decision to add the Lobster tail $20 - what's $20? right? Well let me tell you that it adds up real quick.
My wife and I spent $55,000 at restaurants and bars in 2016. This number does not include vacation expenditures, which would put us above 70K.
We tricked ourselves by thinking that our credit cards are still paid, our only debt is 1 car loan (at 0%) and a mortgage at 1.9% (we live in Canada). We tricked ourselves by thinking that our credit scores the only measure of financial health. We tricked ourselves by thinking that $2400 (less than 1% of our income) is an acceptable amount of money to save each year (a number that is the damn same as we saved making less than 1/4 of the money we make now). We tricked ourselves by saying that next month we'll be better.
I write this only to let you know that lifestyle inflation isn't just excessive vacations, new home and nice cars. It happens with the decisions you make everyday.
I write this just to warn you. Make the decision to save. As much fun as we had in the last 2 years, it's a crushing feeling to think about the money we have wasted. Moreover, we are approaching our 2nd week without going out for dinner even once, and our relationship is still great. Cooking together and watching TV at home is as much fun as going out for a fraction of the cost. I'm not pretending that nice dinners and expensive nights at the bar are going to disappear, but they will be fewer and further between.
Submitted January 13, 2017 at 03:34AM by PFthrowaway86 http://ift.tt/2jewkAo
