Resisting Lifestyle Inflation

This is such a timely post, considering we did just this last weekend. I have a love affair with real estate and, once again, allowed myself to consider the possibility of trading UP. After an entire day was spent driving by houses in our target market and running numbers, we started to feel that all too familiar anxiety of the cost associated with lifestyle inflation. You know that feeling, right? It starts out in your gut and never really goes away. It’s worry that is born out of fear, fear that you can’t comfortably afford to do something. Sometimes the worry is unwarranted; most of the time, it’s not. 

How We Resisted The Urge To Trade Up

It was fairly easy to resist the temporary insane urge to sell our home and buy a bigger one, considering what we went through last year when we nearly got ourselves into a big financial mess. Even though we were considering more reasonably-priced homes this time, it was still ballooning into a hefty increase in monthly expenses for a VERY LONG time. Ultimately, remembering the events of 2015 that actually led to the creation of this blog, and keeping our financial goals in mind, we nixed the idea in record time. Less than 8 hours, to be exact!

Single Mom Complex

Inflation 2I was a single mom for quite a few years before meeting Mr. MMM. Even though I had (and still have) a great, high-paying job, I had to keep our expenses low if I wanted to give us a home, myself a retirement account, and my daughter a college fund. When she was really young (she’s 6-years old now) I made sure she saw New York City, Washington D.C., Baltimore’s Inner Harbor, and the beach. I didn’t do this because I thought she would remember-I knew she wouldn’t. I did it to expose her to different environments and stimuli, in the hopes that it would benefit her developing brain-yes, I’m a scientist 🙂 All of those excursions occurred as day trips because I couldn’t afford to pay for our home, subsidize my mother’s living expenses (that’s another post), contribute to retirement accounts and college funds, AND take REAL vacations. Simply put, I couldn’t afford to give her the childhood I wanted to give her based on my single, albeit high, income. I did the best I could for all of us.

Married

Now that I’m married, I have a second income (even though it’s variable and unpredictable) in my arsenal! This is a luxury that is not taken for granted. After having lived on a single income for so long, the idea that we can actually afford more is tempting, at times. All too often I think I’m doing my daughter a disservice if I keep her in our smaller home. How will she feel in her 10 x 11′ bedroom when she’s a teenager? I feel guilt. It’s unwarranted guilt, but, guilt nonetheless. Reminding myself that the guilt I feel is not warranted and not a good reason to be stupid irresponsible with money. I also need to remind myself that providing my daughter with a stable, loving, easily-affordable lifestyle is BETTER than providing a BIG house.

Minimalism and Wealth Contracts

Committing to minimalism has given us focus and the ability to say NO to unecessary clutter in our lives. But it’s still difficult to resist everything. For me, real estate is much more than a place to live. Growing up in the original tiny house made me feel inferior compared to my classmates. Because of this, the urge to trade UP, not only proves my worth, but provides something for my daughter that my parents could not give me. These are emotional issues that I need to actively monitor and keep in check. My emotional, arbitrary indicators of wealth really have nothing to do with what we need or what makes the best financial sense. Obviously.

Mr. MMM and I acknowledge that lifestyle inflation is something we need to continuously monitor. We also acknowledge that it is difficult, at times, to adhere to the tight restrictions we have set for our money. Because of this, we have developed a wealth contract, specifically stating what we will do with our money this year. We have both signed it. It clearly states what our priorities are and what is acceptable spending for 2016. Thanks for the suggestion, John, at 60-Minute Finance!

What are your temptations? What techniques do you use to resist lifestyle inflation?

Bailey Gato BW

MMC – Minimal Style

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Comments on this entry are closed.

  • abhinaba bhattacharjee Jul 2, 2017, 12:04 am

    Hey it’s an awsome article. The best part about lifestyle inflation is that if I ask you to differentiate between your yesterday’s you with today’s you, you will not be able to differentiate it but still you are not the same person you were 2 years back. It is Invisible.😀😀. You can read my take on Lifestyle inflation here http://investmentprophecy.com/lifestyle-inflation-reason-behind-dissatisfaction/
    I will wait for your feedback.☺

  • Mr. LostinJourney Apr 25, 2017, 8:27 pm

    Great article! I got sucked into lifestyle inflation in my 20’s. Drove BMW’s, 4000sq ft house, fancy vacations..etc. Now in my early 30’s my wife and I live in a 700 sq ft APT., drive a salvaged title car around (It’s a nice car…. low mileage) and can see FI in the near distance. Wouldn’t change a thing, except if I would have learned earlier!

  • BrokeAsB Apr 6, 2017, 11:59 am

    This is one of the hardest changes I’ve had to make in my life. Resisting those granite countertops and an upgraded car is so difficult but once you realize they’re just material and you don’t need them a weight is lifted!

  • seattlegirluw Feb 3, 2016, 4:52 pm

    The best way to avoid wanting a bigger house in our area is to think about the utility bills. I see these gorgeous, big homes — two stories! — and then I think about summer cooling bills in the desert. Especially for two people home all day.

    There are times I wish our home were a little nicer, but I love our tiny mortgage.

    Good for you for reining in your impulses!

    • Mad Money Monster Feb 4, 2016, 3:17 pm

      I do the same thing! Usually the increased mortgage and taxes isn’t too bad, but after figuring in the additional monies necessary to pay larger utility bills, forget it.

      I’m really loving our small mortgage, too!

  • John Feb 3, 2016, 2:18 pm

    Controlling lifestyle inflation is so important and was key to allowing me to retire from full time work this year when I’m 49 years old.

    Being self employed, we controlled lifestyle inflation by only moderately adjusting the amount of money taken out of the company each year. The remaining excess cash was invested. We enjoyed having moderately more to spend each year, but by limiting the increase and investing straight from the company (ie, we didn’t see the extra money in our accounts), we did several things:

    1. Kept our expenses relatively low (but still higher each year – no starvation budgeting)
    2. Increased our savings rate
    3. Lowered the amount of savings we needed to retire because our expenses had been kept in check.

    • Mad Money Monster Feb 3, 2016, 3:34 pm

      It’s extremely important to curb lifestyle inflation. It creeps up on us so quickly that, before we know it, we’re living paycheck to paycheck. Yuck. Congrats on your early retirement!

  • tenleygwen Feb 3, 2016, 9:17 am

    Again – yes yes yes yes. So glad I found your blog, because every post is spot-on!

    The urge to give my son a home he doesn’t have to feel ashamed of or hampered by is such a deep emotional pull. But there will always be someone with a bigger, nicer house. Or a better game system, or nicer bike. Or a hover board. (I really would like to find whoever invented those things and smack her/him in the face.) Better to help him value himself outside the realm of accumulated things. And to teach him how money works!

    You are an amazing mom, and an amazing advisor and fellow traveler — thank you!

    • Mad Money Monster Feb 3, 2016, 3:42 pm

      I actually tried my nephew’s hoverboard over the holidays. It was super fun! But I can’t believe how expensive they are! Yikes.

      I really need to fight my emotions in order to make smart financial decisions. Growing up in a trailer (on the RIGHT side of the tracks) left me with tons of baggage that I am constantly trying to overcome. I want EVERYONE to know that I have “succeeded”-I’m educated and make great (relative) money in a respected field. I guess having a great big house kills a few birds with one stone. Everyone would know how successful I was if they saw my impressive house. And, I would get to put more distance (or should I say, square footage) between myself and my childhood trailer. I never want my daughter feeling the embarrassment of living in a sub-standard home. This pull is so strong that I was willing to risk it all last year. Thankfully the house had mold and I came to my senses. Damn emotions.

      Thank you for the thoughtful comments and kind words 🙂

  • ouellettem Feb 3, 2016, 8:00 am

    Hey from what I have read, I feel you are doing a great job raising you little girl and better than most Americans when it comes to the reasons to have children in the first place. My wife and I from time to time have these same feelings especially when it came time to move from our original home. We could of stayed in our paid off little home which was comfortable and nice but very small about 880 sq feet. But we did move because we felt it was better to move to a much better community that had a better school system and offered better opportunities for my son. The increased size of our home was only a by product of what really mattered in our lives. I think the best and most valuable gift we can give our children is our time, our love and our knowledge of past mistakes. Your doing Great!!

    • Mad Money Monster Feb 3, 2016, 3:32 pm

      Thank you so much! I really appreciate you sharing your similar experience. It’s really difficult deciding where our resources should go. With so many competing priorities (e.g. retirement, college, housing, etc.), it’s easy to get derailed and make mistakes that could cost a ton over the long haul. Thanks for your encouragement! It also sounds like you made the right decision by moving into a larger home to accomodate your family and give them a better community!

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