Avoiding Lifestyle Creep: A Cautionary Tale, Part 1

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Are you trying to save more and pay off debt?  One simple thing you can do is make a small commitment to yourself.  That commitment is to avoid lifestyle creep.  It’s a simple, but not easy, concept to master.

Most times, people follow a typical pattern.  They get their first job, and due to student loans, a car payment, and possibly saving for a house down-payment, money is tight.  They might spend several years living leanly while getting themselves on better footing.  There simply isn’t enough income to be wasteful in a significant way.

Then along comes a promotion or a better job, with more income.  Or maybe it is a bonus from an employer, or some other windfall.  The joy and relief you feel is palpable!  Yes!  Now I can breathe a little and enjoy life more!  It is a very natural and honest reaction to suddenly having more income to live on.  This phenomenon is known as lifestyle creep.  Your spending creeps up in response to having more income available to spend.

At the risk of sounding like a kill-joy, if the above describes you, you are doing it wrong.  You are doing it “normally,” but if your aim is to improve your overall financial well-being over the long-haul, you are doing it wrong.  Perhaps my own story will illustrate the point.  I have had some episodes of doing it right, but also some episodes of doing it very, very wrong.

It is also worth noting that having a minimalist mindset and wanting to live simply have also played a role during the times we did it right.

Early days of our marriage = not much money

When Greg and I were first married, we had some student loan debt and a whole lot of credit card debt between us.  My first job in financial planning after graduate school paid next to nothing, but Greg had been working for the same company for several years, and his pay was pretty decent.  By the time I met Greg, I had also discovered the idea of simple living, and the seeds of minimalism were planted!

The house we bought was most definitely in the category of “starter home.”  While it was a financial stretch for us to get a down payment together, the monthly mortgage payment was within reach.  We definitely spent some money to fix up the house, but it was mostly cosmetic work.  Neither of us was very interested in heavy décor, so our spartan decorating style worked well with our limited budget.  We furnished our home with hand-me-downs and other used items.

Our collective goal at that time was to get out of debt.  Due to our different work schedules, we didn’t have the opportunity to spend much on entertainment, but we did spend too much on eating out.  (We were hard-pressed to get motivated to cook dinner when we were always cooking for one!)

When I started my own financial planning firm one year into our marriage, I started taking on a lot of business debt (a crap-ton, if we’re being completely accurate).  Due to the business barely making money and having to service the debt with that income, I brought home virtually no income from the business the first few years.  To help make ends meet, I picked up two teaching gigs at local universities.  I pretty much worked non-stop those early years.

Lifestyle creep?  Not too much

How did we do on lifestyle creep in those early years?  Not bad!  Most of those years were so filled with work and the chaos of having six dogs in a tiny house that we didn’t have time to think about “upgrading” our lifestyle.  We were more concerned with just keeping up!

And as I mentioned, I was super-sensitive to the fact that I was racking up debt in my business.  Sure, I was full of optimism that I had a valid plan to get all the business debt paid off in a short number of years.  But as a rule, I don’t like debt.  It makes me nervous.

The heavy weight of the business debt hovering over me, coupled with my continued interest in simple living, did the work of keeping lifestyle creep under control.  Like most young people starting new careers and a new marriage, we were focused on getting the basics under control.

The real issues with lifestyle creep were soon to arrive on the scene, though!  Since this blog post has taken a different turn than I originally intended, I’ll split the story up.  Next week I’ll talk about the middle days of our marriage, how lifestyle creep reared its ugly head, and how we coped with our challenging financial life.

Have you experienced lifestyle creep?  Share below!  Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your thoughts!

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You might also enjoy:

A Nice Day for a Cheap Wedding

My Simplicity Story

 

**That is NOT a photo of our house.  No digital images exist from that period of our lives.  But you get the idea.

 

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