Avoiding Lifestyle Creep: A Cautionary Tale, Part 2

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What do you do when you get a bonus at work or a pay raise?  Do you spend a little to celebrate?  Do you upgrade your wardrobe and vehicle?  Or do you pat yourself on the back and pop that new-found money right into your savings?

Last week I wrote about lifestyle creep, the phenomenon that occurs when your spending creeps up in response to having more income to spend.  Most people probably experience it to some degree, and it is interesting to look back over your life to see how lifestyle creep may, or may not, have reared its ugly head in your life.

It is a natural response to increase output (your spending) when input (your income) has increased.  As a result, it is a challenge for us to fight the urge to let our lifestyle creep if it is our goal to reduce our debts or increase our savings.

In last week’s post, I told the tale of my early married life and how lifestyle creep had an impact on our meager finances.  My aversion to debt and interest in simple living certainly helped keep lifestyle creep under control.  And actually, having almost no free time prevented a good bit of incidental spending!  We worked a ton and had six dogs by the time we moved to a bigger house.

Let’s move on in my story, because as our income increased, our lifestyle most definitely started to creep.  We still did some things right, but other decisions make me cringe just a little looking back.

Middle days of our marriage = more money, but the creep begins

Those early days of our marriage are a blur of work, adopting too many stray dogs, and trying to get ahead.  But we continued with our debt paydown and still kept our lifestyle under control.  We optimistically planned to live in that starter house for a year, and then upgrade to a better house.  We ended up living in that little house for four years before deciding to buy a bigger house.

House number 2 was outside our target price range when we searched.  It was on a whim that we saw it on the listing sheet and decided to go see it “just for fun.”  Long story short, we had to ford a creek (next to a waterfall!!) to get to the house.  It was a beautiful property, a decent little house, and there was zero chance we were not going to buy it.  The price was a problem, but we ended up negotiating it down some, and the seller was willing to hold a second mortgage to assist us getting a first mortgage to buy the house.

Meanwhile, we decided to rent out our starter house.  The rent covered all the expenses, but we had no capital to work with for a down payment.  Luckily, that second mortgage deal (the seller REALLY liked us!!) made it all work.  To say that we were house-poor for the next few years is understating the case.

But we had our youthful optimism!  After all, this was 2001, and the market and economy had been in the pits for two straight years.  SURELY that was about to change, and my company would start making more money, right?  Wrong.  There was a whole additional year of bad markets to come, which made things … exciting.  But not in a good way.

It is clear that we had no business buying the second house WHEN we did, or at the PRICE we did.  But in our favor was the fact that we continued to be diligent in paying off our household debts, even in the face of ever-increasing business debt.  By the time house #2 came into being, we had all my student loans paid off, and most of our credit card debt was gone.  We had only a small car loan, but our dual house payments were hefty.

The first few years in house #2 were joyous in many ways.  We had the ability to hike behind our house right up to the top of the ridge, and our property was truly gorgeous.  We kept our heads down and worked hard those first few years to make the property our own and get our debts further paid down.  There was no room for lifestyle creep, other than the obvious creep of buying more house than we really should have!  We could afford it on our incomes, but it left little room for discretionary spending.

Vehicles and plants = evidence of the creep

After a few years, the markets straightened out and my income rose a good bit.  At work, I was able to start aggressively paying down my business debt and still had enough revenue to increase my salary (finally!).  With this bit of pressure lifted from my business finances, our home finances also improved.

Because the pressure valve released some, we became a bit looser with our money.  My splurge spending came in the form of landscaping plants.  I developed an interest in gardening and herbs, and I worked with some professional landscapers to learn about installing native landscaping plants, with an emphasis on edible plants.

Greg has always been interested in vehicles, and he’s very good at finding great values and buying used.  During this time there MIGHT have been some vehicle upgrading, including some more heavy-duty yard tools like a riding mower.

Oh, and a boat.  Pre-owned and a most excellent deal, price-wise, but a boat.  We started spending one day each weekend at a lake that is about 90 minutes from our house.  We would start early, packing snacks and sometimes loading up a lucky dog, and we’d make a day of it.  I would swim and read, and Greg would fish.  It was heaven!

Lifestyle creep, I see you!

All in all, for this period of our marriage, I would give us a solid “B” for our avoidance of lifestyle creep.  We didn’t go completely crazy with spending once our income started to increase, but we did loosen up.  In the “win” column would be the fact that we stayed in our starter house for four years, versus the originally planned one year.  It would be wrong to suggest we purposefully, mindfully decided to wait longer.  We waited because we had to.  Our finances just didn’t get to where they needed to be quickly enough.

While staying in our small, very affordable house longer was a win, buying house #2 was definitely not a win.  It wasn’t a loss, either, because we loved that house.  LOVED that house.  We spent a total of 13 years living there, and as time went on, it became a very affordable house compared to our further-increased income.  Nevertheless, it was definitely risky to overshoot our financial situation at the time we bought it.

It was in house #2 that my interest in simple living really took off.  Working toward more self-sufficiency through building gardens and learning new skills was the order of the day.  But due to our improving financial situation, we didn’t have to scrimp along on that project.  I could spend the money I wanted to spend on getting the garden where I wanted it to be, sooner.

Yes, we bought a boat, which is pretty much the antithesis of simple living.  Buying it used and at a great price certainly helped, as did the fact that we used the heck out of that thing.  So, no regrets in that department!

If you have been reading along on this lengthy saga and feel like this is just one long story about lifestyle creep that didn’t really amount to much, stay tuned.  Part 3 of this story is where we decided to increase our family size.  And children are not cheap.

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:

Avoiding Lifestyle Creep: A Cautionary Tale, Part 1

A Nice Day for a Cheap Wedding

My Simplicity Story

 

**This actually IS a photo of house #2 soon after some landscaping was installed.  That whole bank filled in eventually with blueberry and other bushes, and the small poplar sapling was removed to provide more sun.

2 responses to “Avoiding Lifestyle Creep: A Cautionary Tale, Part 2

  1. I will be 60 in 2 months. I have a nice truck, car,house and rental house ALL paid for. I have worked in retail my whole life so I have never made a lot of money but I tried to be smart (I def have my fails) about my spending/ saving. NOW I am negotiating to buy a piece of property in the country. I have to get the money by refinancing my primary home. This is definitely lifestyle creep. I am trying to justify by saying I deserve it and I do but at what cost to my simple life. This is a 30 year note! I am torn and secretly hoping my offer will be turned down. Your thoughts?

    1. Hi there! First, kudos to you for getting to 60 with no debt! Sounds like you have been careful and a good saver, despite not making a lot of money. You should be proud of yourself. On this new property, what is your goal? To build there and move there? Would you sell your house or rental? Would you keep the house as a second rental? Whether you should do this or not completely depends on what your plan is and how you will execute it. I don’t think I’d dismiss it out of hand just because it increases the complexity of your life IF it gets you to a simpler, more desirable life down the line. That said, you secretly hoping your offer will be turned down definitely suggests you have doubts, and I wouldn’t ignore that, either. Keep me posted, now I’m curious! (You can email if you prefer – Dawn@SimpleMoneyPro.com)

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